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Term Life Insurance – An explanation of why we need Term Life Insurance

Term life insurance refers to the period of time the policyholder would like to receive life insurance.  Unlike the permanent insurance term insurance does not accrue a cash value but is designed to pay out in the event of death during a specified term. Example: Term life Insurance can be taken for a 20 year period, if death occurs during those 20 years, there will be a pay out. If, after 20 years you are still alive the policy lapses with no cash value but in most cases can be renewed. This is cheaper Life Insurance. Read on for further examples of where term life insurance is recommended.

term life insuranceTerm insurance only covers death of the insured as there are no other benefits to this policy.  The influences regarding this type of life insurance are protection or death benefit known as face amount, the premium which is payable by the insured and the length of time i.e. term.

Level, annual renewable and mortgage are types of term life insurance.  Level term policy refers to a fixed premium for longer than a year. The terms include 5, 10, and 15,20,25,30 and in some cases 35 years.  The premiums are constant which is ideal for long-term budgeting, long-term planning and asset management.  Once the term has ended the insured can either convert their policy into a permanent one or renew their existing one.  Some life insurance companies provide the insured with a guaranteed renewal other life insurance companies do not allow for this option.  The insured should be aware of the conversion and renewal options.

A one year policy is referred to as an annual renewable policy. In this case the insurance company guarantees to issue a policy of lesser or equal value despite the insurability of the candidate at a premium set for his/her age.

Mortgage life insurance is another type of term insurance which offers a limited protection or death benefit at a level premium.  The protection or death benefit or face amount should be of same value as the policyholder’s mortgage.   Should the insured die the mortgage amount will be settled.

Term life insurance offers the insured life insurance for a certain period of time.   Should the insured die within that specified time frame then the beneficiaries will inherit the money.  In some cases the exception is if the policyholder commits suicide.

It is in your best interest to choose life insurance that suits your needs and your financial profile.  Your family would require money to continue to live after you have passed on.  Debt, school fees, mortgage and other expenses can be settled if you choose the correct life insurance to cover you and your family.

There are numerous professional life insurance companies that will provide you with quotes.  Shop around to find the best price and compare it to other life insurance companies.  There are cheap life insurance companies which will provide you with adequate life insurance.

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