Life insurance is taken primarily to provide protection and safeguard your family and other dependents’ future by providing them financial stability, as the primary earner. Initially when the concept of life insurance came into existence term life insurance was the only life insurance available, but as time passed by more and more products came into existence. Even though other life insurance products provide more cash incentives, term life insurance is still the favorite among many because it is the cheapest of them all. Term life insurance simply provides protection without the burden of extra cash like in the case of whole life insurance and universal life insurance.
Suppose, if tragedy comes and you die all of a sudden, then your family and other dependents would be in financial trouble, but term life insurance helps your dependents by offering financial coverage not only to pay for your funeral cost but also offers financial compensation, for the loss of your income. This way they are saved from getting into a financial mess. Although this may vary depending on the percentage of total coverage ot that initial loss based on the kind of policy you have taken.
Generally, people believe that term life insurance is especially for those who are married and have a family, but it is not true, there are many benefits available for even those who are single and have no family or dependents. This means you can take this insurance to cover your funeral cost, which can be a costly thing. With this insurance, a person is actually covered from all the risks mentioned in the policy for a set period of time called the “term”. Once this term is over, it is up to the person insured whether or not he wants to continue with the policy. If a person wants to continue with the policy, he will have to pay the annual premium with a fresh rate which depends on your age. This insurance policy should not be treated as a means to pay the final expenses after your death. This insurance also helps to cover the financial liabilities of the person insured. These can be mortgages, consumer debts, dependent care, and education fees of the dependents.
Like any other insurance term life insurance is also used to satisfy claims against the person insured as long as the premiums are paid and the contract is fully functional. For example, if you take car insurance and meet with an accident then your insurance will help you take care of any obligation against you due to that accident. Or in the case of home insurance then the insurance company will pay you for any damage to your home due to any accident or natural disaster. Although term life insurance should be taken for a larger period of time, it is better that you take term life insurance for a minimum period of ten years. This way you can save yourself from being charged more since health can decline fast. In many cases, if you are dealing with some serious medical illness, you may even not get further insurance coverage.