Do You Really Need Life Insurance? - By: shay

For so many reasons, most people are not at ease with purchasing regular life insurance policies even though the benefits are sure to be reaped in the end. For this kind of people, term life insurance is the best option because it insures an individual temporarily, giving this individual the power to opt to be insured within his chosen period of time. It is also up to him to decide whether to renew his life insurance annually or not.

Now, let me enlighten you about term life insurance.

There is a life insurance philosophy endorsed by proponents of term life insurance. It is called the Theory of Decreasing Responsibility, which states that there is no permanence to the financial responsibilities of an individual and that the purpose of an insurance policy is just to cover for responsibilities. Financial stability is built through time, and by the time a particular person would have need of life insurance, he would already be independent enough to self-insure and withdraw from the life insurance program.

Following this philosophy, term life insurance becomes the best form of life insurance because it does not establish cash value. In contrast to whole life insurance, a person becomes insured only within his specified amount of time. Because of this, the premiums for term life insurance cost lower than whole life insurance policies.

Now, which period of time is the best to be covered when considering purchase of a term life insurance policy?

Remember that when choosing the period of time to be covered for the term life insurance policy, a person has to take into account his life expectancy.

So, the cheapest and most convenient form of term life insurance to purchase is exact one-year term life insurance policies, but most people are not in favor of buying one-year terms. This is because it is highly improbable that life insurance companies choose to cover for a person who would possibly die during the next year since it is their prerogative which persons to insured.

What most people prefer are annual renewable term (ART) life insurance policies. An individual pays to be covered for a period of one year. After this year, his life insurance policy expires, but he has the choice whether to renew his one-year coverage for an X number of years (which is usually around 10, 15 to 20 years or more) or to totally discontinue it. Being insured this way is impeccable because the benefits are more likely to be enjoyed even though the premiums are higher than exact one-year terms.

There is a kind of annual renewable term that is quite popular amongst term life insurance policy holders. This is called a level term. In a level term, a person is covered on an annual basis with an unvarying premium that can be renewed for around 10, 15, 20 or 30 years, depending on which he chooses. But we also have to take note of the fact that as time passes by and a person gets older, the level term’s premium goes higher because life expectancy becomes lower and a person’s age is taken into account when calculating the cost of the premium.

Life insurance policy is a good investment that protects your family and the money you have worked for. So, whether you choose a whole life insurance policy or a term life insurance policy, just be wise. After all, it is your family, your money, your life.

About the Author

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