What is Term life insurance

Life insurance is a concept on its own that needs adept understanding so as to avoid the pitfalls of some people in the past, it is a necessary commodity in today’s world that defines with it a whole different associated terminologies.

We live in a world where risks abound every day, these risks come in different form; the term risk is an official or business language, the layman for want of better understanding might know it as danger or the tendency of danger. To avoid or provide for a bad event occurring is cost implying and that is where the whole compound context of Insurance came out from.

Now back to where I was, life insurance is a form of insurance in which an interested person would stake out for in order to create certain provisions in the event of his own death or someone else but provided he has an insurable interest in the person. The insurance provider or company would provide you with whatever provisions you agree on based on predetermined occurrence of particular events and by doing this you would make across some payments called Insurance premium and through this you are benefitting from the insurance policy and the Insurance Company too is making some business profits; it is a business and mutually benefiting relationship. Hence it is regarded as a legally binding contract between you and the insurer or insurance provider, whichever you prefer to call it.

The policy owner or holder is you who is taking out the policy and you would be responsible for paying the premium, you would also determine who the insured would be; it could be you or another person.

The insurance company must produce an agreement based on what you tell them that you want and also other things as the information you provide to them; you would be required to fill a questionnaire that would require your provision of every personal, medical and lifestyle details. They do this, I mean the insurance company in order to determine the amount of risk you pose to them and that they would be responsible for. This amount you pay to them would be pre-determined and it must be paid on a timely basis, maybe monthly, quarterly or yearly depending on what you agree with them. A term life insurance is a type of life insurance that most people go for because it is for a short period, cheap and affordable. When the insured dies, the predetermined sum of money is paid to the people you put down as beneficiaries, most times your spouse and children or siblings also.

There are different types of Term life insurance and this includes:

Level term life insurance

Decreasing term life insurance

Convertible term life insurance

Renewable term life insurance

What makes Term life insurance policy different is that as opposed to universal life insurance that runs for life, this is for a short interval insurance policy most times in intervals of say 5, 10, 15, 20, 25 years. After which the policy is terminated or if the policy holder so wishes, it could be renewed.