Short Term Life Insurance Buyers Guide

There are many differences between acquiring a short term life insurance policy for your family and a cash value insurance policy.  Term life insurance is usually taken for a limited time period to provide immediate financial coverage for an individual’s family in the event of the insured’s unexpected death.  Some of the financial responsibilities short-term life insurance may cover include college expenses for an insured’s children, care of dependents, mortgage costs, funeral expenses, loans and more. Because these insurance policies are less expensive than cash value, they are more commonly chosen.

You can purchase a term life policy for anywhere from one year up through a 10 year term life insurance policy or sometimes even more.  Premiums on these policies vary according to the length of time you are taking the policy for, the coverage amount you choose, your age and general health; however, in general, the cost of the monthly premium is low making them fairly easy to pay.  Cash value insurance policies are effective as long as you want them to be, generally until an individual’s death, and premiums are much more expensive.

Flexibility of choice in term length as well as low monthly premiums are some advantages of term life policies making them easy for most people to obtain.  In addition, dependents are guaranteed collection of financial benefits in the event of the insured’s death during the term of the policy.  An insured may cancel this policy anytime during the term if he desires, or renew it upon completion of the term at his convenience.  Coverage can also be reduced upon renewal if you want to lower your premiums.

Disadvantages Of A Short Term Life Insurance Policy

Some disadvantages to term life policies is that if you choose not to renew the policy once your term is completed, you do not receive any compensation for the funds you have paid neither does your family receive any benefits.  In addition, as you increase in age and/or your health wanes, renewal costs of these policies will increase as well and you may find your premium increasing substantially.  After a certain age, many insurance companies refuse to renew a term policy.  In contrast, in addition to receiving full compensation upon death, cash value policies offer a variety of additional programs that allows you to accrue savings, take loans against your policy and more.

The type of insurance policy you choose is a personal decision.  However, by comparing the pros and cons of both types of insurance policies, you will have a better idea of which would best serve your interests in both the short and long-term duration in offering the financial protection your family deserves.