Term life policies are furnished as a very low premium and high death benefit policy. There is NO cash value to these policies; only a death benefit. They can be purchased for specific amounts of time in 1 year, 5 , 10 , 15, 20, 25, 30 year terms to lock in a level rate and benefit to meet the needs of the client. Some are guaranteed renewable and some are not. Guarantied Renewable means at the end of the specified initial term, the policy can be renewed without evidence of insurability of the client. The rates will be much higher at that point. Some companies allow clients to accept a smaller face value to keep the premiums lower or the same. Most term policies do not renew because of the increase in premiums.
Some companies also offer riders on term policies such as Waiver of Premiums due to disability, Children riders that cover a child of the clients until they reach a certain age. And also, a rider for double indemnity in case of an accidental death. (This pays twice the natural death benefit listed on a policy.)
These policies are consistant with younger people wanting to protect family needs such home mortgages and cost of living and raising children for a specified number of years should a death occur. They are also important to business partners that have loans or want to protect a companies future should a part owner or partner of the company die. Life insurance proceeds could be used to buy out the partners share to keep the company in business and perhaps save jobs and ongoing validity of any business.
Term policies with Return of Premiums are often purchased by college students to cover the cost of student loans. In case of death, the loans can be repaid or if not, then, after 20 years the insured is guaranteed that 100% of premiums paid for the policy are returned.
FACT. Only a very small percentage of TERM LIFE policies actually ever pay out the death benefit as most are cancelled or terminate before the insured dies.
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