Life insurance has been around a long time. The original concept was developed by the friends and neighbors of each local community. When a family member would die, a collection was made by the members of that community and donated to the deceased?s family to give their loved one a proper burial. The concept hasn?t changed much but the size and parameters of the communities and the money collected has grown immensely. Insurance companies were formed to manage these community deposits and distribute them to designated beneficiaries at the time of death. One of the earliest forms of life insurance is term life insurance. Its name actually gives you its definition. The word ?term? indicates a period of time. That is exactly what term life insurance does. It provides coverage for a specific period of time and then terminates. Some people call it temporary life insurance.
Term life insurance has its purpose and advantages. The benefits are temporary and so the premiums reflect a lower rate. Whole life policies are designed to last a lifetime and so the premiums are considerably larger. Term life insurance can be purchased for specific as well as temporary needs. Decreasing term life insurance life insurance is often purchased to protect a home mortgage. A 20 year home mortgage and a 20 year decreasing term policy are perfect financial partners. The need is temporary and the time period is fixed.
Young families purchase term life insurance because it is affordable at their attained age. There are guaranteed conversion privileges in term life insurance. The conversion option protects the insured?s ability to keep the insurance by changing it to a permanent plan without evidence of insurability. This is a desirable option if the insured becomes uninsurable because of some injury or illness. Term life insurance is the most affordable way to start a life insurance program. You can protect large assets and your family income with low cost term insurance. When in doubt, buy term life insurance.
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