Term life insurance, also known as term assurance is an insurance product that pays out if the policy holder dies within a certain time period (in contrast to whole-of-life insurance, which covers a person for the whole of their life). You can choose what term you are covered for: 10, 15 or 20 years, for example; the term life insurance quote will be lower for a shorter time period than for a longer one. You can take out a term policy as an individual or as part of a couple; in the latter case, you can arrange a policy that pays out if either of you die during the term. Term life insurance Defined.
Why Choose Term insurance?
The chief advantages of a term policy over a whole life policy are that it is much simpler and significantly less expensive; good news for those seeking cheap life insurance quotes. A term life insurance quote will be much lower than one for a whole-of-life policy, but your beneficiaries will still be provided for if you die during the specified term. However, you can renew your policy for a new term to ensure that you are still covered in future. When seeking cheap life insurance quotes, it's important to consider the ways in which your needs are likely to change over time. For most people, outgoings are likely to decrease over the years: dependents become independent and loans or mortgages are paid off. For others the reverse may be true - if you have remortgaged your home, for instance. A term policy allows you to reassess your household's financial needs and the ways in which they have altered over the term of your policy; and to choose a new product that meets them effectively.
Drawbacks
One drawback is that unlike some cash value whole-of-life policies, a term policy can't double as a savings plan; no part of the premium is available to earn interest. Another disadvantage is that if your death occurs after the specified term, there will be no death benefit for your dependents unless you have taken out a new policy.
Decreasing Term Life Insurance
Cheap life insurance quotes - With a decreasing term policy, the death benefit - the payment that your beneficiaries receive if you pass away - gets smaller over the term of the policy at a predetermined rate. Typically the decrease will occur on a monthly or yearly basis. If death occurs after the term has passed, of course, there will be no payment.
Decreasing Term vs Regular Term
Decreasing outgoings may mean that some people find a reduced death benefit sufficient for their needs. That said, most financial advisers do not recommend that you depend on a decreasing term policy as your primary insurance. A decreasing term life insurance quote will be not be much lower than a quote for a regular term policy, meaning that you will pay a similar premium for a decreasing death benefit. A decreasing term policy may be appropriate as a secondary policy, perhaps to cover a smaller loan rather than a mortgage.
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