What Is Term Life Insurance and How Does It Work?

Many people are under the impression that term life insurance is not for them. That is a major misconception that is shared by many people of all ages. If you are concerned about your debts and your loved ones, you should know that term life insurance can offer the security that you and your family need until you reach your financial goal. What is term life insurance? How does term life insurance work? Find the answer to those questions by reading the article below.

 

How Term Life Insurance Can Protect You?

Finance experts describe term life insurance as a great form of protection for everyone. With that said, it is up to you to decide if such a policy would be beneficial for you and your family. Regardless of your beliefs, term life insurance can benefit everyone involved. How can term life insurance protect you and your family? Well, for starters, the policy will cover all or most of your debt after you are deceased. That form of protection will prevent the debt from be transferred to your loved ones after your death.

If you own a home and/or business, you know the importance of protecting them. With term life insurance, you can protect your home, business, and family. For example, when a policyholder dies, the death benefits will cover their debts, so the responsibility doesn’t fall back on the loved ones. There is nothing worse for some people than debt. It can cause stress that will lead to more severe health complications. We believe that term life insurance coverage can help to reduce that stress.

 

Term Life Insurance – How It Works?

Once you know the importance of term life insurance, you need to learn exactly how it works. Term life insurance is a product that covers a deceased person’s debts. What that basically means is the coverage will payout to the beneficiary after the policyholder is declared deceased. The death benefits can be utilized to cover all kinds of debt, including your mortgage, student and co-sign loans, medical expenses, utility bills, car payments, credit card debt, and personal expenses. Unfortunately, debt does not just go away when the individual dies.

 

Term Life Insurance – Claim Process

As soon as a policyholder is declared deceased by a licensed physician, the beneficiary will need to initiate the claim process. Most insurance companies allow their clients to file their term life insurance claims online, via a phone line, or email. If you opt to complete the process online, you will need to access the insurer’s official website. Click on the Menu button and scroll down to “Claim”. Once you click on the Claim feature, you will be directed to a form. Fill out the form to the best of your ability and submit it once it is completed. It is crucial to note, more accuracy and completeness will help speed up the claim process. So, there the insurer will not experience any issues that could lead to a delay in your receiving the death benefits.

Once the claim is initiated, the insurer will start validating the policyholder’s death. The death ruling must meet the terms of the policy. If it is determined that fraud or any other type of criminal activity is involved in the policyholder’s death, the insurer will put a hold on the death benefits. If the issue is cleared up at some point, the insurer will write a check for the full amount of the death benefits and send it to the beneficiary.

 

What Happens If A Term Life Insurance Policy Terminates?

It is crucial to note that term life insurance does have an expiration date. Unlike some other types of life insurance policies, term life will expire after the term length deadline. The policyholder chooses a term length when the policy is purchased. The term length can range anywhere from five to 30 years, depending on the eligibility. So, it is crucial that you take the time to determine which term length is more suitable for your needs and preferences.

Unfortunately, some term life insurance policies will expire before the policyholder. In that case, the policy will no longer be valid. If the expiration date is one day before the policyholder is declared deceased, the insurer will not reward the beneficiary with the death benefits. So, be careful to choose the correct term length the first go-around.

 

Term Life Insurance – What Is Covered?

Term life insurance is activated, in most cases, on the same day, it is purchased. The policy will remain active until the term limit expires. At that time, the policy will no longer be valid. In the meantime, the policy will cover the full amount of the death benefit. The policyholder chooses the amount of death benefit at the time of purchase. If you opt for a $500,000 term life insurance policy, upon your death that amount will be paid out to your beneficiary.

Term life insurance death benefits can be utilized for any kind of death and personal expense. Your beneficiary can utilize the benefits to pay off any outstanding debts, tuition for your children or grandchildren, and other personal expenses. If you want your death benefits to cover specific debts, you need to specify that in your will.

 

Term Life Insurance Types

At the end of the day, you have to understand that there are numerous types of life insurance. And, they’re not equal. Therefore, you’ll need to make sure that you get the right one. Below, you’ll find out a lot more about the different types of term life insurance.

 

Level Premium

A level premium life insurance policy is highly recommended. With this type of policy, you do not have to worry about the premiums increasing over time. If you get a 20-year policy, you can sleep soundly knowing that the premium is going to remain the same for the entire duration of the policy. And, you should be able to renew your policy without having to go through another physical exam. The only problem is that the premiums are going to raise after the level term period has passed.

 

Annual Renewable Term

Another option is the annual renewable term life insurance option. With this type of insurance, you’re going to be covered for one year. However, you’ll have the option of renewing every year for a specific period. For instance, you can renew the policy every year for 10 years. The only problem with this insurance policy is the fact that your rates are going to increase every year.

 

Return Of Premium

Return of premium is another option. This is not a good option for everyone. A return of premium insurance plan is only a good choice for people who are confident that they’re going to outlive the policy. If you’re much older, you should stay away from this type of policy. If you manage to outlive the policy’s term, you will receive the premiums back. When signing up for this type of insurance policy, you need to shop around as much as possible.

 

Guaranteed Issue

Guaranteed issue is a good insurance option for some Canadian consumers. This type of policy is generally best for people who are in poor health. With this type of policy, you do not have to worry about being asked about your health. And, you do not have to get a medical exam. While this offers benefits to some people, you need to understand that it is going to come with a much higher premium. Still, it might be worth it for some consumers.

 

Final Expense

Finally, you have the option of signing up for a final expense term life insurance policy. This is a good option for certain people. If your family doesn’t need a lot of money, this is the policy for you. It will ensure that your family receives a small amount of money so they can pay for your funeral and other final expenses. The only problem is that this policy is not going to offer much else. It is best for covering your funeral bills but it will not much assistance other than that.

 

Term Vs Permanent

When you begin looking for life insurance, you will need to choose between term life and permanent life. You will find that both offer numerous perks but only one is going to be right for you. Therefore, you need to go above and beyond to make sure that you choose the insurance policy that works best for you and your family. If you’re interested in minimizing your premiums, you should stick with a term life insurance. This is a good way to minimize your commitment too.

However, a permanent life insurance plan offers perks too. For instance, this is a good option because it is not going to have an expiration date and you want to make sure that your beneficiaries will receive money. With a permanent life insurance, you’ll be able to build cash value over time. Remember that Sim Gakhar can help you find out what you need. Working with a professional is the best way to ensure that you’re going to get the best insurance policy for yourself and your family members.

 

How To Choose The Right Policy

Finding the right insurance policy for your individualistic needs will prove to be very difficult. Simultaneously, you need to find out how much to get and what term is going to work best for you. So, what do you need to do to find out what is going to help you the most? Ultimately, you’ll need to consider numerous factors. For instance, you have to think about the financial needs of your family and your current financial needs. You’ll also need to consider your debts. How much money will your family need to ensure that they’re able to thrive after your death?

How much money is needed to ensure that they’ll be able to pay off their debts and get out of financial trouble? While you should never overpay for life insurance, it is pertinent to make sure that you get enough coverage. If you do not, there is a good chance that your family is going to experience hardship after you’ve passed away. With that being said, you’ll want to make sure that you follow the steps below to ensure that you’re able to get a sufficient amount of life insurance.

 

Consider Your Circumstances

First and foremost, you need to take the time to consider your circumstances. If you’re young and in good health, there is a higher chance that you’re going to live for many years to come. And, you should have to worry about getting sick too soon. With that being said, your insurance requirements are much lower. If you’re older and you do not have insurance, you should get insurance as soon as possible and you should get more insurance.

 

Shopping Around

There are numerous insurance companies in Canada and they’re not equal. This is something you’ll have to consider when attempting to sign up for a term life insurance policy. You need to make sure that you shop out extensively so you can get the best deal possible. This will make a huge difference in the long run and it’ll help ensure that you’re able to get a plan that is going to protect your family to the fullest.

 

The Fine Details

When signing up for an insurance plan, you need to pay close attention to the fine print. Remember that your insurance policy is considered a legal document. And, you’re going to be signing this document. With that being said, you need to pay close attention to the fine details. If you do not, you may end up regretting signing the paperwork. It might be a good idea to get the document analyzed by a lawyer before singing on the dotted line.

 

Do Not Lie

Ultimately, you’re going to be asked numerous things during the application process. Sadly, you may feel ashamed and you might not want to tell the truth. This is a big problem. You need to tell the truth. The insurance company is not going to look down on you for something you’ve done in the past. It is pertinent to tell the truth. After all, you do not want to get into trouble for insurance fraud!

 

Keep A List Of Beneficiaries

At the end of the day, you need to understand that your life is going to change over the years. You may get a divorce or your kids might pass away. Anything can happen so you’re likely going to be forced to make changes to your insurance at some point. One thing that you’ll need to do is make a change to the beneficiaries. If you get a divorce and remarry, you’ll want to add your new spouse to the policy. And, you’ll want to remove your ex-wife or ex-husband. It is a good idea to keep a list of beneficiaries so you can know who is going to receive benefits and who will not.

 

How Much You’ll Pay

It can be tough to know how much you’re going to pay for insurance. And, you have to understand that this is going to depend on numerous factors. If you’re healthy and you do not smoke, you’re going to end up paying a lot less. Simultaneously, you have to understand that women will likely pay less for life insurance than men. The insurance company will consider your occupation when trying to find out how much to charge too. 

If you’re a 50-year-old female who is signing up for a 1-year plan, you will end up paying roughly $600 for an insurance policy with $250,000 coverage. If you’re a man, you will pay slightly more. If you’re only 30-years-old, you will pay $232 for the same policy.

 

Stop Smoking

At the end of the day, you have to know that smoking is very detrimental to your health. With that being said, the insurance companies are aware of this problem and they know that smokers are a higher risk. With that being said, you are going to face numerous problems as a smoker. When you smoke cigarettes or chew tobacco, you’re putting yourself in a very dangerous situation. You’ll be much more likely to get sick and you’ll likely die much earlier. Many people do not understand that smoking is going to significantly increase their life insurance premiums too.

You’re damaging your health by smoking cigarettes. Therefore, the insurance company is going to consider you a much higher risk. With that being said, you should think about stopping this activity. If you’re able to stop and not smoke cigarettes for many years, you may be able to minimize your premiums by as much as 300%. It will be very difficult to stop smoking cigarettes but it will pay off in the long run.

 

Should You Double The Coverage?

As you should know, you have the freedom to customize the amount of insurance coverage that you want. If you want to increase the coverage to better protect your family, you’ll be able to do that without jumping through too many hoops. However, you should understand that increasing the coverage is going to lead to an increase in premiums too. Therefore, you have to be very careful about increasing the coverage too much. Depending on your specific needs and preferences, you may think about doubling your coverage.

While many people believe otherwise, you should know that doubling your coverage is not going to double your premiums. With that being said, you should not hesitate to increase your coverage. However, it is a good idea to speak with your insurance provider first. By working closely with this individual, you will be able to figure out how much you’re going to pay for additional coverage before finalizing the deal. Either way, you have to remember that doubling your coverage does not mean that your premiums are going to double too.

 

Your Medical Exam

Remember that you’re going to be required to get a medical exam before you can sign up for life insurance. The insurance company doesn’t want to take a major risk on its clients. Therefore, they’re going to make sure that they understand the risk before moving forward. Besides getting a physical exam, you’ll also need to answer questions. For instance, the company will want to know more about your family’s health history and health history. They’ll also ask about your family’s health insurance.

You need to have the answers together and you need to be as accurate as possible. During the exam, there is a good chance that you’re going to end up being asked about your drug and tobacco use. You need to be honest. After all, the company will likely require you to take a drug test anyway. So, there is no reason to lie about it.

However, you should know that you can find insurance policies that do not require a medical exam. However, those instant-approval policies might not be the best option for you. While they can be beneficial for many people, you have to understand that they come with severe drawbacks. For instance, you’re likely going to end paying a lot more for an instant-approval policy.

If you have very poor health and you need insurance quickly, you might want to choose an instant-approval policy. If you do not and you want to minimize your prices, you should get the medical exam.

 

Shopping For Term Life Insurance

Getting insurance will prove to be a difficult task. Nevertheless, it’ll be well worth it in the long run. Once you’ve put in the time and effort, you can guarantee that your family is going to be cared for after your demise. With that being said, you should get insured as soon as possible. It is pertinent to work with a professional such as Sim Gakhar. You’ll also want to follow the steps below so you can get insured as soon as possible.

  • First and foremost, you should find out how much you’re going to pay for life insurance. One of the best ways to do that is by utilizing an insurance calculator. You will find many of these tools online and they’ll make a big difference. You will find complex calculators that consider your mortgage, funeral costs, income, debt, and other things. Either way, it is a good idea to use a life insurance calculator so you can know how much you’re going to pay.
  • Next, you need to make sure that you choose a life insurance company. Sadly, some companies aren’t worth time or energy. With that being said, you need to choose one that is going to treat you right and provide you with a good deal. It is a good idea to rely on customer reviews when making your decision. You should also speak with the company and research its history.
  • Once you’ve completed the steps above, you’ll want to select a length. Remember that you can customize your insurance policy to suit your specific needs. You will find that the terms range from 10 to 30 years. Therefore, you need to find out what term is going to serve you best.
  • Now, you need to make sure that you choose the right amount. Again, you have the freedom to customize your policy to suit your needs. You need to choose the amount that is going to be best for you and your family. The possibilities are endless so it can be tough to know how much insurance is needed. Most families will be fine as long as you have insurance ranging from $100,000 to $250,000. This should be sufficient for most families.
  • Ultimately, you’re going to be required to get a medical exam before you can get insurance. The insurance company wants to know how much of a risk you’re going to be. Therefore, they’ll consider your height, weight, health history, and blood pressure levels to determine how much of a risk you are. There is also a good chance that the insurance company will analyze your blood and urine.
  • Finally, you can sign up for the policy. Once you’ve completed the steps above and you’ve submitted the application, the company will take the time to approve your application. Once you’ve done that, you will need to pay for the first premium. After the payment has been made, the insurance will become active and your family will be protected.

 

Summary

Getting insurance doesn’t have to be difficult. If you’re confident that term life insurance is going to be the best option for you, you should get covered as soon as possible. You’ve found the steps for getting insurance above. If you’re ready to get covered, you should sign up soon. You cannot wait or you’re going to run into numerous problems. Make sure that you work with an insurance advisor. With their assistance, you can sleep soundly knowing that your family is going to be protected to the fullest.

 

Get in touch

I am always a call away. If you are looking into life insurance coverage for the very first time or would like to discuss your existing policies, I would be glad to be your Markham life insurance agent.

My contact information can be found here.

Sim Gakhar