Life insurance is so confusing. You pay for it, you die, they pay your family, right? Wrong; it’s so much more complicated than that. You have to do this, that and the other. Your death has to be investigated in some instances. Paperwork has to be filed and so many things have to be handled before your family will ever see any of your life insurance policy. Additionally, it seems that you have to think about the fact that you also have to consider what type of policy you want in the first place. Of course there’s not just one type of life insurance; that would make insurance less complicated and irritating, and where’s the fun in that? So for the sake of keeping insurance as confusing as possible to those of us who don’t work in the industry, you have to choose between term life insurance and whole life insurance. But what’s the difference? In all honesty, the length of time that the policy lasts and the amount of money you have to pay. Here’s what you need to know about term life insurance.
Term is far less expensive than whole life because you only pay for it for so long and it has no cash value. For example, if you pay for whole life insurance your entire life, you can take out the cash value of the policy when you need some extra cash. Term is something you only pay for during a very specific length of time, such as 20 years. It has no cash value, so it’s a lot less expensive. Additionally, the younger you are when you apply for this policy, the less expensive it becomes.
What’s the Time Frame
Many people choose the 20 year mark for their term policies, but you can choose a policy that’s good for one year or up to 30 years before the policy expires. It’s all about what suits you most, benefits you the most and makes you the happiest when it comes to figuring out what you can afford and what you need.
How it Works
If you have a term policy and you die during the term, the person or persons listed as beneficiaries on your account will receive the money from your policy. If the term ends and you do not renew it, your beneficiaries will not receive the money from your policy. That’s why it’s important not to let this policy lapse.
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