The 10-year term life insurance policy is one of the simplest and most easily explained types of life insurance.
This term policy has a guaranteed level death benefit as well as a guaranteed level premium that lasts for 10 years.
With some insurance companies, the insured is allowed to renew the policy for another 10 years at a higher premium. If you are looking for a high death benefit at a low premium for a fairly short period the 10-year-term life insurance policy is for you.
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10 Year Term Life Insurance Explained
- Death Benefit
Upon the death of the insured the full face amount is paid to the beneficiary …either in one lump sum or in the form of a monthly income.
The method of payment of the proceeds of the 10-year term life policy is usually decided by the insured during their lifetime.
This decision can be locked in at the time of application. In some cases the beneficiary…if an adult…is allowed to decide how payment should be made.
- Conversion Privilege
Term life insurance is temporary insurance…and most people have a permanent need for life insurance. To ensure that the policy owner always has the insurance s/he needs all insurance companies allow the insured to convert their 10-year term insurance policies to a permanent type policy within a given period.
Some companies allow conversion at any time, as long as the policy is in force. Some limit the conversion period to a certain number of years. As an example, an insurance company may say that you must convert your 10-year term policy within 8 years.
- Available Riders
With most life insurance companies the applicant for a 10-year term life insurance policy may elect to add certain riders to the policy which would enhance the benefits to the owner. Here are some of them.
Waiver Of Premium Rider
The waiver of the premium rider may be added to your 10-year term policy at a minimal cost. If you should become disabled while you own the policy, after six months of disability the insurance company will pay the premiums for you.
You would have your insurance just as if you were paying for it yourself. Whenever you can go back to work again you pick up the premiums. Nothing is owed to the insurance company for the missed premiums.
Accidental Death Benefit Rider
Let us suppose you had an automobile accident and died. If you had a 10-year term insurance policy with an accidental death benefit rider the insurance company would pay to your beneficiary the full face amount of the policy, plus the amount of the rider.
Let us suppose you had a $100,000 10-year term life insurance policy with an accidental death benefit rider…double indemnity…and you died in an accident, the insurance company would pay $200,000 to your beneficiary. If you had triple indemnity the insurance company would pay $300,000.
Living Benefit Riders
Ever since the aids virus started spreading and killing people life insurance companies noticed that policyholders, because they were incapacitated, found themselves strapped for cash as the disease developed.
They created a living benefit rider that could be added to new policies which would allow the policy owner to collect a portion of his or her death benefit before death.
This is only if they are terminally ill. This would ease their financial burden and allow them to live out their lives with less financial pressure. You could add this rider to the 10-year term life insurance policy…if your company offers it.
Spouse And Child Riders
Some life insurance companies allow you to add a comparatively small spouse or child rider to your 10-year term life insurance policy. This is usually a 5-year or 10-year term policy which would be cheaper than had the policies been bought separately.
- Minimums And Maximums
Each life insurance company has certain minimum and maximum amounts of insurance they would issue on an insured. One company may not issue less than $20,000 of 10-year term life insurance and not more than $1,000,000. This is just an example, as some companies offer as much as $10,000,000 or $20,000,000.
If you therefore need a large amount of life insurance and you have limited funds the 10-year term life insurance policy may be ideal for you.
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