term life insurance rates

When intending to buy insurance, it is always best to know what exactly it is that you are looking for. Generally, life insurance is divided into two basic types:

1. Permanent or whole life insurance

2. Term life insurance

Permanent or whole life insurance is, as its name, an insurance plan that you pay for your whole life. It runs for as long as you are alive and death benefits are paid out to your beneficiaries. Coverage is very comprehensive, covering even injuries and permanent or total disability, which means if you should be in an accident and get seriously hurt, you will be paid benefits.

This type of insurance is also more complicated, with intricate terms of explanation for its protection and few limitations. Benefits are very attractive with some pay outs running into the millions. Naturally, premiums are much higher thanterm life insurance rates, which are almost negligible in comparison. The latter is, of course, the more affordable life insurance.

Getting a whole life insurance is a whole life commitment, much like buying a new home with an unending premium payment plan. As such, this type of insurance will mean you must have a secure financial means of some kind as premiums will have to be paid every year, no matter what. This particular type of insurance becomes a burden in hard times of lay-offs and retrenchment, or pay cuts. However, you may feel this is worth it with the wide coverage you will be getting by paying those premiums.

In total contrast, term life insurance is valid for a pre-specified duration or term (hence, its name). When you sign up for one, you agree to its terms and conditions for that term - its premium rates, death benefits and limitations of coverage. The important thing to remember about term life insurance is that you are protected only during that term. Once that expires, your protection automatically stops and your death benefits will not be paid out to any beneficiaries.

This is why insurance firms usually send out reminders of renewal before the expiry dates so you will never miss an end of term and your coverage is seamless. The main point to note about term life insurance is that it is effective only if the plan is continuous. This continuity can be disrupted by a non-payment of premiums. Any time the premiums are not kept up to date, the coverage will cease (with notice, of course) and the policy will be null and void.

On the whole, term life insurance rates are very much lower than its counterparts. Some contributing factors are:

- A low pay out rate. At about 5 percent, the paying out of claims for term life insurance is the lowest in the industry.

- Limited coverage. Its limited protection helps keep maintenance and costs low which explains the low premiums.

- Automatic termination of policy. Being valid for a specified term, termination of a policy does not need any pre-emption of any kind. Once the term has ended, the policy is automatically invalid. This is particularly true for life insurance plans of a longer period, say, 10 or 20 years.

- Simple, straightforward underwriting. One thing that stands out is the simplicity of the plan. You will find that you are able to understand the terms and conditions set out very quickly,

As with everything else you want to purchase, being on the lookout for the most affordable life insurance should be the foremost on your mind. Just because you want the best never means spending more than you should on your insurance.

If you are looking for good, comprehensive coverage, then choose your insurance plan wisely. There are some term life insurance plans that are not as limiting as the others. You may even find that some plans cover more than one aspect. A hospitalization plan, for instance, may cover you for hospitalization and medical costs only. But a home lifestyle plan may cover for hospitalization, medical costs, injury from accidents and even provide for some form of home insurance. The best part is, being a term insurance, it is also an affordable life insurance to purchase.

Both forms of insurance are not the answers to all your needs. More often than not, you will need to start off with one kind of insurance first then move on to another different one to cover the areas the first one did not.