Term life insurance provides the beneficiary of the policyholder, a lump sum payment in the event of death. The coverage lasts for a specific period of time called ‘term’. This could be a one-year, five-year or lifelong policy. During the period of cover, the premium will not increase, and no medical underwriting is needed. Hence, it is important to calculate the length of coverage needed before buying such a policy.
Why term life insurance is important?
Term life insurance is also known as income replacement. If your family members rely on you financially, it is important to ask yourself what would happen if you die prematurely. Thanks to life insurance, you can secure your loved ones’ financial needs despite the loss of financial support following your premature death.
How much does it cost?
Term life insurance is one of the most affordable life insurance policies. But, of course, the price increases significantly with age. The earlier you buy term life, the more economical it is. Also, the longer your coverage lasts, the more expensive your premium will be. It is important to estimate the length of coverage needed as well as the sum insured before buying such a policy. The sum insured will be based on the amount required by the beneficiary to fulfill financial commitments and to maintain a similar lifestyle after the premature death of the earning member.
What is the difference between keyman insurance and term life insurance?
Keyman insurance is a term life insurance. The only difference is that for keyman insurance, the beneficiary is a moral entity, not a physical person. In this case, a company buys a life insurance policy on its key employee, pays the premium, and is the beneficiary in the event of this key person’s death. This is done to secure investors and help the business recover from the loss of one of its most valuable assets.