What is the term life insurance?
Term insurance is the least expensive way to purchase an adequate death benefit on a coverage amount for a specific period of time. Temporary life insurance (Term life insurance) is a suitable plan for temporary needs of individuals and families. It gives financial protection that entire family will be taken care when premature death happened for certain period of time (term) and have fixed premium for entire period of the policy.
How many kinds of Term insurance existing?
Term life insurance plans could be design for 10 years, 20 years or 30 years. It can provide family and dependents current lifestyle; pay off the mortgage, debts and other liabilities in case of death and is just life insurance. These policies offer a number of additional options like Increasing coverage, Decreasing coverage, Renewable and Convertible term which can be customized by you adviser.
Whose Term life insurance is designed for?
This kind of life insurance has designed for those who:
- Lack of the financial resources to purchase adequate permanent life insurance.
- Need to have a large amount of life insurance coverage for relatively small premium.
- Have no need to estate planning so not concerned about paying income tax at death.
- Need a large amount of life insurance for a limited time (10 year-20 year-30 year)
- Have the discipline to save money outside the life insurance in the other investment vehicle.
- Need to satisfy a lender’s condition that a loan gets approved. In this case, lender will assign as the beneficiary.
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What are three important elements in Term life insurance?
There are three key factors to be considered in term insurance:
- Face amount (protection or death benefit)
- Premium to be paid (cost to the insured)
- Length of coverage (term).
Some insurance companies sell term insurance with different combinations of these three factors. The face amount can remain level or decrease. The term life insurance can be for one or more years. The premium can remain level or increase. One type of term life insurance is called “annual renewable term” (ART) which consider as a permanent life insurance.
What is the premium adjustment?
It is a one year life insurance policy but the insurance company guarantees it will issue a policy of equal or lesser amount with no need to the insurability of the insured. It goes with “premium adjustment” for the life insured’s age at that time.
Another type of term insurance is mortgage insurance, which is a level premium and decreasing face amount policy. The face amount is intended to equal the amount of the mortgage on the policy owner’s residence so the mortgage will be paid if the insured dies.
Is Term insurance cheaper than permanent life insurance?
The Term is inexpensive and is designed to cover the risk of death. As there is no saving or investment portion on it (pure life insurance) so premium pay to insurance company as the cost of insurance (COI) neither investment nor management fee (MER).
What is the cheapest life insurance in Ontario?
The cheapest life insurance in Ontario is usually offering by banks and credit card companies in the name of accidental death benefit insurance. The coverage is low, premium is inexpensive and with no medical test (insurability) and pay just for insured’s death following by an accident.
