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Death Benefit: The death benefit is the amount of money that is paid out to your beneficiaries if you die while the policy is in effect. It is usually a tax-free lump sum payment and can be used by your beneficiaries to cover expenses such as funeral costs, outstanding debts, mortgage payments, or day-to-day living expenses.
Premiums: Term life insurance typically has lower premiums compared to permanent life insurance policies, at least initially. Premiums are generally based on factors such as your age, health, lifestyle, and the amount of coverage you choose. Premiums are generally fixed for the duration of the term but may increase if you choose to renew the policy after the initial term.
Renewable and Convertible: Some term life insurance policies offer the option to renew or convert the policy at the end of the term. Renewal allows you to extend the coverage for another term, although the premiums may increase based on your age at the time of renewal. Convertibility allows you to convert the term policy into a permanent life insurance policy without the need for a medical examination.
No Cash Value: Unlike permanent life insurance policies such as whole life or universal life, term life insurance does not accumulate cash value over time. If you outlive the term of the policy, it will expire, and you will not receive any money back.
Coverage Amount: You can choose the amount of coverage you need based on your financial obligations and goals. The coverage amount should be sufficient to replace your income and provide for your dependents' needs in case of your untimely death.
Underwriting: When applying for term life insurance, you will need to go through an underwriting process. This typically involves filling out an application, answering health-related questions, and may require a medical examination or medical records review. The insurer assesses the information to determine your insurability and premium rates.
It's important to carefully consider your needs and consult with a licensed insurance agent or financial advisor to determine if term life insurance is the right choice for you. They can help you understand the specific terms, conditions, and options available to meet your requirements.
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