How The 10 Year Term Policy Works
The guaranteed death benefit of the 10 year life insurance policy remains level for the entire 10 year duration and can be paid out as a lump sum or in income form.
This policy is also called a 10 year term policy or a 10 year term life insurance policy.
If you or your beneficiary should choose have the policy proceeds of your 10 year life insurance policy paid out in the form of an income there are many choices.
The income can be paid on a monthly basis, a quarterly basis, every 6 months or once per year. The decision as to frequency of payments usually depends on the reason you choose to take the proceeds in income form and the size of the policy.
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10 Year Life Insurance Policy Proceeds Payment
As mentioned above you can choose to have the proceeds of the policy paid in one lump sum. If your beneficiary is a person who is accustomed to handling large sums of money then this may be a good way to have him or her receive payment.
- Some people are very frugal and capable when handling money while others are the extreme opposite. The policy proceeds would disappear in a very short period of time and…there would be nothing to show for it.
Bear in mind that how you elect to have the proceeds paid can be very important as a determining factor as to whether or not your intended desires come to fruition.
- Another choice of payment of the proceeds of your 10 year life insurance policy is the life income option. Let us suppose you have a beneficiary who you want to financially support for the rest of that persons life.
You have doubts as to whether or not that person will invest the lump sum in an efficient manner. This person may be someone who wastes money on trivialities. It may be wise to use one of the life income options.
To give them the largest life income possible you would choose a life income with no certain period. This means that your beneficiary would receive payment at certain intervals for as long as he or she lives.
The problem is that the income would terminate upon the death of that beneficiary regardless of whether or not an amount equivalent to the lump sum has been paid.
Another way of paying proceeds in life income form is to have the insurance company pay the proceeds with a guaranteed certain period.
What this means is that income derived from the proceeds of your 10 year life insurance policy would be paid to your beneficiary for life, however, there is a minimum guaranteed period.
The income would be less than the choice mentioned above. You could choose a life income with 5 years certain, 10 years certain, 15 years certain or 20 years certain. The longer the guaranteed period, or certain period the lower the income.
So if your beneficiary starts receiving the income and dies one year later a named contingent beneficiary will continue receiving the income. If that contingent dies a second contingent or further payee will receive the income for the balance of the guaranteed period.
- The proceeds at death of your 10 year life insurance policy can also be paid out using the fixed period option.. In lieu of a lump sum payment the death benefit would be paid out in equal amounts over a fixed number of years.
With interest added to the portion of the principal held by the insurance company the total would be considerably more than the face value of the policy.
- You have the option also of telling the life insurance company to pay out a fixed amount of money at certain intervals to your beneficiary until the proceeds are exhausted.
- Upon your death you can elect to have the life insurance company hold on to the proceeds of the policy for a specific period of time but pay the interest earned to your beneficiary at predetermined intervals.
At the end of that period of time the principal would be paid in one lump sum. This is known as the interest option.
Your 10 year life insurance policy has a level premium for 10 years…there is no cash value. Basically, this is how a 10 year term life insurance policy works.
At extra cost you can have the waiver of premium rider added to your policy. You can also add the accidental death benefit rider.
10 Year Term Life Insurance Policy In All It’s Glory
If you are looking for inexpensive life insurance may be the 10 year term life insurance policy would fit your need perfectly. This is life insurance in its simplest form. The 10 year term life insurance policy contains a guaranteed death benefit from the outset and a guaranteed level premium. After the initial 10 years some life insurance companies allow you to renew the policy for an additional 10 years at an increased premium. This 10 year term policy provides you with ample insurance for small outlay over a fairly short period of time.
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- Policy Death BenefitIf you are the proud owner of a 10 year term life policy and if you should die within 10 years of your ownership of this policy the full face amount is paid to your beneficiary, either in a lump sum or in the form of a monthly income. The monthly income may take one of several different income options. You may choose to take a life income with no certain period. After the beneficiary begins receiving the income if s/he should die suddenly that would be the end of the income. No one would get anything more from that 10 year term life insurance policy. It does not matter if the income is paid only for one month. There are other options that would assure you, however, that your beneficiaries would receive more of a pay out.You could choose to pay them a life income for a 10 or 20 year certain period. This would guarantee that the income is paid for 10 or 20 years respectively. You could choose a fixed period option which would guarantee that the income is paid out for a fixed period, example 20 years or you could use the interest option, which would keep your principal in tact and pay only interest to beneficiaries for a specific period of years. At the end of this period the principal would be paid.
- Term Insurance Conversion PrivilegeMost term insurance policies have built in a conversion privilege. The 10 year term life insurance policy is no exception. This is because term insurance is temporary insurance and people usually have a need for permanent for life insurance. You can convert your policy usually to any permanent policy within a specific period of time. Some companies limit your conversion period to 8 years, whereas others may allow the policy owner the full 10 years.
- Available Riders To Your PolicyThere are certain riders that you can add to your 10 year term life insurance policy which would tremendously increase it’s value to yourself and your beneficiaries. You may add the waiver of premium disability rider. If you should become disabled, anytime after 6 months of disability, the life insurance company will pay your premiums for you even if it is for the entire duration of the policy. Now, isn’t that just great?Another rider that you can add to your 10 year term life insurance policy is the accidental death benefit rider. This is sometimes referred as the double indemnity rider. If you should die in an accident the life insurance company will pay double the death benefit to your beneficiaries.
- Minimums And MaximumsThere are certain minimum and maximum amounts of 10 year term life insurance that insurance companies will be prepared to issue on an applicants life. This may vary by age and medical history. Some companies may be prepared to issue between $20,000 and $1,000,000, others may start at 100,000 and go as high as $10,000,000 or $20,000,000.
- Living Benefit RidersThe aids virus brought about a fairly new idea which many life insurance companies have adopted. Because of a tremendous need for additional cash terminally ill people may sell their policy to investors for a percentage of its value. As an alternative you can add a rider to your 10 year term life insurance policy which would allow you to withdraw a portion of your death benefit during your lifetime. This is called a living benefit rider. It would serve to ease the pressure on the terminally ill and their families.
- Spouse And Child Term RidersMany insurance companies offer the opportunity for you to add to your 10 year term life insurance policy…a comparatively small term life insurance rider on the life of your spouse and children. These riders are usually 5 year term or 10 year term riders which work out to be less expensive than had the policies been bought separately.
That is basically how your 10 year term life insurance policy would work for you.
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