CHICAGO, April 8, 2022 (GLOBE NEWSWIRE) — Term life insurance provides financial protection for your loved ones at an affordable rate. If the policyholder dies while the policy is active, the beneficiaries will receive a substantial death benefit that they can use to replace income, cover end-of-life costs and pay off debts.
These policies are often simpler than permanent life insurance, but there are still a few things customers need to know to be more informed when looking for term life insurance quotes. Let’s dive into five things you need to know about term life insurance so potential policyholders can feel more confident as they shop around and compare term life policies.
1. Several factors affect the costs of the policies
Many factors can affect the cost of a term life insurance policy, including:
- Age: Older policyholders pay higher premiums than younger policyholders.
- Health: Health problems or a family history of health problems can result in higher premiums.
- Gender: Men tend to pay slightly higher premiums than women.
- Of smoking: Smokers pay higher premiums.
- Worked: Some jobs, like airline pilots or firefighters, are considered risky. Policyholders can pay more if they work in one of these high-risk jobs.
- Hobbies: Some hobbies are considered high risk, such as skydiving and car racing. If an insured engages in any of these activities, his or her premiums may be higher.
- Insurer: Some insurers may charge different premiums than others for the same amount of coverage.
2. Policyholders can add additional clauses
Riders are add-ons that policyholders can pay to include in their term life insurance policy for additional coverage or other benefits. A popular rider is the accelerated death benefits rider. This allows the policyholder to potentially receive a portion of the death benefit early if diagnosed with a chronic or terminal illness. Using this rider, policyholders can use the death benefit to cover costs associated with a major health problem.
3. The insured may have to undergo a medical examination
Most term life insurance policies require policyholders to complete a medical questionnaire and undergo a medical exam. The policy holder will usually take this after applying for the policy. Once the policyholder submits their application, the insurer will provide instructions for scheduling the medical exam.
Medical exams provide insurance companies with accurate health information that can help them assess a policyholder’s eligibility and calculate how much they will have to pay in premiums. Policyholders who have health problems or a family history of health problems may face higher premiums.
4. There are several types of term life insurance
There are several types of term life insurance, and comparing these policies can help policyholders choose one that fits their budget and coverage needs:
- Tiered Term Life Policies: Level term life insurance provides a death benefit for a fixed period of time.
- Renewable term life policies: These policies allow policyholders to renew coverage without a medical exam, which means they cannot be denied the new policy. But keep in mind that the new policy will charge higher premiums.
- Convertible term life policies: These types of life policies allow policyholders to convert some or all of their term life coverage to a permanent life policy without undergoing a medical exam, helping them avoid denial. But once they convert to the new policy, the premiums will go up.
5. There are many terms available
Term life insurance generally offers terms of 10 to 30 years. This makes it easier to get the right amount of coverage and stay on budget. For example, if a policyholder has a new child and wants to supplement her current policy until the child is an independent adult, she could get a 20-year or 25-year policy to increase coverage at an affordable rate. Then, when the child grows up and the policy expires, the insured no longer has to worry about paying the additional premium.
The bottom line
Term life insurance policies can offer excellent financial protection, but understanding how they work is vital so policyholders can get the coverage they need without overpaying. Various types and terms are available, and policyholders can add riders if they want other features, but these are not the only factors that affect premiums. Age, gender, health, job and medical exam results can also influence a policy rate.
Researching and comparing is one of the most important things life insurance customers can do besides understand how these policies work. By collecting multiple quotes, policyholders can find a great policy with affordable coverage.
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