A term life insurance cover offers financial protection to policyholder and dependents for a specified time period. If policyholder dies within the said time span, insurer is liable to pay death benefit to dependents. It is for this sole reason that such policies cannot accrue any kind of cash value because of which they tend to be much cheaper than whole life insurance covers. And the death benefit received by dependents is exempt from any tax liability due to which such a policy is an attractive proposition for buyers.
Thus, in a way, term life insurance is rather like staying on rent than buying a house. Renters are required to pay rents every month only until the duration of lease with homeowners. Similarly, with term life insurance, policyholder is required to pay premium only till the term of the policy. And when the term gets over, policyholder can receive assured sum of the money as specified in the policy contract.
Term Life Insurance Is A Valuable Plan To Help You Get Started
Life insurance policies are available in 3 major types - whole life insurance, universal insurance and term life insurance covers. So, when exploring your options, it is important that you choose the right option for your specific circumstances. The main purpose of buying life insurance policy is to make sure that life is adequately covered and your family interests are totally safeguarded. And life insurance policies are specially designed for paying off unpaid principal mortgages and any other forms of loans or debt in the event of policyholder’s death. Therefore, it is vital that you have some understanding regarding different options work.
While term life insurance covers pay death benefit to dependents if policyholder dies midway through the term of his policy, the coverage can be accessed for a specified period of time only. That is the main why it is cheaper for many people. On the other hand, whole life insurance policy offers coverage throughout policyholder’s life.
Thus, buyers need to be careful in their choice at the time of exploring their alternatives.