What is Term life insurance? Get a overview of it.

Term Life Insurance, as the name suggests, is another type of life insurance but this is for a term. This type of insurance is a temporary contract between the policyholder and the insurance company. The contract will expire after the stipulated time; say after 30 or 40 years. In the event of death of the policyholder, the term life insurance policy protects his family by paying benefits to them. You will buy this policy for a specified monthly premium, which is lower than usual.

If you are unable to afford a whole life insurance policy in which you have to pay a higher amount of premiums, you may choose this kind of insurance. Here you would pay lower amount of premium in comparison to the whole life. Younger people who have liabilities towards their families may opt for such insurance. Unlike whole life insurance policy, this is neither an investment nor a savings. It does not usually build up any cash value. The benefits will be given only once upon the death of the policyholder.

Some factors are taken into account when your premiums are set for the term life insurance policy. Since the rate of premiums is cheaper, the insurance company will analyze some points. Your medical report is important. If you suffer from any terminal illness such as cancer or so, your chance to get such policy is low. If you have any heart disease, you will get the policy but with a higher premium rates. Your profession is also analyzed. If you work, say, in a chemical factory in a risk, you may not get this type of insurance. If you are a smoker, your chances will again be lower as smokers die early, as they say.

In fine, I would say, this type of policy is better for those people who are on a budget and who need some protection for a certain span of time. It provides more security at a less cost. This is good for those people with many obligations such as marriage, loans, and so on.