What Term Life Insurance Does
Term life insurance definition. What is term life insurance? How can one define term insurance? What can it do for you?
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Term Life Insurance Definition
- How Term Insurance Works
A term policy is a contract between a life insurance company and an insured, you, in which a specific sum of money will be paid upon the death of the insured in consideration of a monthly, quarterly, semi annual or yearly premium.
The insured must die within a specific period of time, as stated in the contract, for the payment to be made.
The applicant may opt for a 5 year term, a 10 year term, a 15 year term, a 20 year term, a 25 year term or a 30 year term policy. Some term policies may be kept up until ages 65, 80 or age 90, or 95.
- Why Buy Term Insurance?
Although there are many reasons to buy term insurance most people buy these policies for family protection. Raising a family cost a lot of money. People opt to buy term life policies because they are very inexpensive.
Business people also buy term policies to fund buy sell agreements in case a partner or shareholder dies. They also use these policies for key man life insurance.
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