Term life insurance is pure insurance. It is like automobile or homeowners insurance. Pay a set premium and the insurance company covers the agreed upon area during the specific term of the policy. If there is no claim during the term, the insurance company keeps the premium and the coverage terminates. If there is a valid claim then the insurance company pays according to the provisions of the policy.
Prior to searching the market for term insurance, a decision needs to be made as to how of a term and how much insurance. For example, a man or woman with small children may decide they need a term that lasts until the youngest child is 25 years old. If the youngest child is 5, then a 20 year term policy would cover the situation. The premium would be fixed for the entire term as would the amount of death benefits. The premium would be determined by the sex and age of the applicant as well as the health history and results of any physical examination and tests required by the insurance company.
Insurance companies ask for a health history. Be prepared to answer questions about prior medical treatment with dates and conditions treated. Family health history is also important, including information about parents and any health related problems. If any parents or siblings are deceased, the insurance company will want to know the cause of death. Full disclosure is essential. Failure to disclose prior medical problems can be a reason to deny death benefits. Make sure everything is mentioned and when in doubt disclose.
Using online tools to obtain quotes for a term life insurance policy is a good way to find the best policy. Just remember to provide the identical information to each company so the price comparison is valid. A good and trusted life insurance agent can also assist in obtaining quotes. Find out if the agent represents several companies or is the exclusive agent for one company. It is always a good idea to get quotes from more than one company.
Term life insurance is a good way to provide substantial coverage for a specific purpose, such as providing a death benefit to pay the costs of raising minor children or paying off a mortgage. It is not an investment as it expires when the term ends. The term can be extended but generally only by increasing the premium and passing a new physical. It is important to make sure the initial term is long enough to meet the needs of the policyholder.
Determine the number of years and amount of coverage, get medical information in order and then seek out quotes to find the best and least expensive term policy available.