What Is Term Life Insurance?

The original and by far most cost-effective form of life insurance is term life insurance.  There has been a virtual explosion of life insurance products in recent years, running the gamut from moderately-useful depending on your circumstances to out-right rip-offs.  For a variety of reasons to be discussed below, term life is almost always the most inexpensive way to provide life insurance for your family.

What Is Term Life Insurance?

A term life insurance policy is simply a contract between the underwritten (you) and an insurance company with a set term (often 20 years), a set monthly premium, and a set death benefit to be paid out in the event the underwritten individual dies prematurely.  After the set period of time has elapsed, you generally have the option of either dropping the policy or pay annually-increasing premiums to continue the coverage.  Additionally, there are state and federal guarantees in place to protect your coverage in case your life insurance company goes bankrupt.

************
Save up to 20% on Life Insurance, Free Quotes!

************

How Does Term Life Insurance Work?

Term life insurance, the multitude of other varieties out there, is purely an insurance product:  there is no cash value, investment component, guaranteed returns, or any other complication.  The contract is simple:  if you die before your term is up, your beneficiary receives the death benefit specified at the time you buy the policy.  If the term expires, neither you nor your beneficiary receive any sort of financial payoff.

Because of the simplicity of the contract and the fact that the life insurance company’s actuaries are extraordinarily accurate at estimating the company’s eventual liability, insurers can offer extremely competitive rates on term life insurance policies, often totaling no more than a few dollars per month for young, healthy individuals.  Of course, the downfall is that once your term runs out, you get nothing.  Whole and universal life insurance underwriters attempt to lure naive customers away from term life insurance by incorporating a cash value or investing component to the policy, saying that term life is a waste of money since you only receive a payoff if you die.  However, these whole and universal life policies are much more expensive and infinitely more difficult to understand.  Most consumers will find the additional guarantees are nowhere near worth the additional cost.

Where Can I Get A Term Life Insurance Quote?

Probably the easiest way to go about getting quotes is on the internet through an aggregator like Netquote, which will get quotes on your behalf from several large, financially-secure national insurance companies and have them forwarded to your email.  You can then go through the quotes at your leisure and contact only the most promising offers, which could save you a lot of time and significant amounts of money. Compare and save on life insurance with free quotes from Netquote.