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Term
Life Insurance...The Basics
Term
life insurance provides a death benefit only. It does not
build cash value. There are three Types of Term Insurance:
Annual
Renewable Term - Death benefit remains level. Premium increases
annually since there is an increased likelihood of death.
Level
Term - Both the death benefit and the premiums remain level
for a predefined period of time; usually, five, ten, fifteen,
or twenty years.
Decreasing
Term - The death benefit decreases each year even though the
premiums remain level. This type of term is often used to
cover a mortgage or other loan with a decreasing balance.
Characteristics
of term insurance
- Low
cost in the beginning
- Premiums
increase over time
- Can
help to meet specific short-term needs.
- Has
no cash value
- Lasts
a specific period of time…no more; no less.
The alternative
to a “Term” life insurance contract is a “Permanent
Life” insurance contract commonly referred to as “Whole
Life” or “Universal Life”. These permanent
polices will have higher premiums in the early years than
a “Term” policy, but can last your entire life and
can build cash values which are available to the policyowner
while living.
You can
also set up a permanent policy to pay premiums for a period
of time (i.e. 20 years) but have the insurance protection
continue even though premium payments have stopped.
Martinson
Insurance
518 Hawthorne Street • PO Box 8
Alexandria, MN 56308
Phone: 320-763-6518
Toll Free: 800-757-6518
Fax: 320-763-5546
E-mail: agency@martinsoninsurance.com
Web: www.martinsoninsurance.com
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