When the insured passes away, the beneficiary receives payment from their insurance policy through a term life insurance plan. The policy is for a term of years, for example 10 years. Once that term ends, the policy will no longer be valid, so any money spend on it, will not be paid out. Although you're given the choice to renew your policy, your rates will increase. Similarly, a person can buy a policy for term up to age 100 and you will receive guaranteed benefits until time of death.
If you are married, have dependents or own a home, a term policy is generally recommended. When the income earner of the family dies, the income received by the breadwinner also disappears, often leaving the family with little to live on. A term policy can be in a set amount, or it can be tied to the income of the policyholder, for instance, 5 years of salary.
Even if a person remains at home as the caregiver for the family, a term policy may be a good idea. Because the surviving spouse will continue to earn a living, substitute services will be needed for child care.
A term policy can be used for other reasons also, and a policy holder can obtain more than one policy. For instance, a term policy can be used to pay off a mortgage in the event of the death of the mortgagor. Paying off the mortgage undoubtedly eases the financial burden of the family. The policy can be structured to decrease in the benefit amount as the mortgage balance decreases. This is called a decreasing term. The policy premiums are generally less expensive for a decreasing term than a regular term.
The amounts paid in premiums of a term policy in a Canadian life insurance policy vary. Term premiums are often quoted per $1,000 of coverage, or a face amount. If a person desires a $500,000 policy, just multiply the quote per $1,000 by 500 to get the exact premium amount. The factors determining the premium are the age of the policy holder, the health of the policy holder, the amount of the benefit and the length of the term. Smoking and non-smoking rates are available.
Though a term life policy doesn't build equity within the policy, the premiums are lower, allowing the policyholder to purchase a larger policy. Or, the policy holder can apply the savings from lower premiums to another investment. A term policy can have premiums of up to 50% that of a whole life policy, for the same face amount of insurance.
Policy premiums will increase with age, so it is advised to lock into a lower rate as a younger individual. You're more likely to get a cheaper rate if you don't smoke and if you exercise regularly. But for anyone who has people relying on them financially, term life is considered a must have financial investment product.
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On the net, it takes just 5 minutes to get a good life insurance policy. Comparison shopping sites will display multiple life insurance rates .
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