Low Cost Term Life Insurance

Term life ins. are considered as low cost life insurance plans, although they have a few disadvantages. Firstly, they offer only limited term protection based on the number of years you have chosen initially. If you chose to buy a 20 year term life ins when you are 20 years old, you may not be offered automatic policy renewal when it matures. By then, you are 40 years old and may have developed some health conditions which makes it difficult to find a life insurance company that will accept you into their plans.

No matter when you buy the term life ins, they will lapse when you reach the age of 75. This is the maximum age whereby the insurance company will continue to provide a death benefit till. However, whole life insurance policyholders can choose to continue with their plans beyond 75 years old such that their beneficiaries can receive a very substantial death benefit eventually. That is why term life ins usually have no roles in estate planning.

The nice advantages of term life ins is its low cost and flexibility. Many people bought inappropriate life insurance plans when they were younger but choose to continue with the premium payments because they are not willing to give up on the cash value they have accumulated over the years. However, cheap term life ins do not have such restrictions. Anytime you decide that you no longer need the death benefit cover, such as when you buy a new whole life policy, you can let the term life ins policy lapse immediately. They do not accumulate cash value anyway.

Cheap Term Ins

You can buy term life insurance that last from anywhere between 1 month to 30 years. Due to the nature of the human body's health and immunity, the younger you start buying into a life or health insurance policy, the cheaper the rates will be. Similarly, the per day insurance rates for a 1 month term life ins policy will be several times cheaper compared to a 30 years term life ins. That is why it is not recommended that buy term life ins that are longer than 10 years, unless it is a reducing term mortgage policy that is meant to payoff your home mortgage loan in the event of your demise such that your family need not worry about the house being repossessed by the banks.

The most common term life ins. is the so-called level term coverage that provides a fixed death benefit whether it is awarded one year after you buy the policy or just before it lapse. As mentioned earlier, the other type of term life ins is reducing term where the death benefit gradually reduces until it is zero at the time of policy maturity. For example if you have just taken a home mortgage loan at $200,000 over a 20 year period, the bank will require you to buy a 20 year, $200,000 reducing term ins to ensure that the mortgage will not be defaulted in case you are no longer around.

A reducing term ins is always cheaper compared to the level term policy since it has a shrinking sum assured. You can also choose to buy a reducing term life ins even if you do not have a mortgage. Some people with tight budget choose to buy reducing term life ins because, initially their children are still young and financially dependent on them. But after 20 years, they will have been working and supporting themselves and there is no real need to provide a large death benefit to them by then.

Term life ins. is the best way to buy cheap death and dependent protection coverage for people on a tight budget. You can purchase a sizable amount of death benefit for just a few dollars a month, less than what you spend on a pizza. For young adults are recommended to buy some term life ins. and low cost medical insurance as part of sensible financial planning before the more expensive whole life and investment linked policies.