Term Life Insurance – Understanding the Basics

Term life insurance is currently the most popular life insurance purchased in the United States. In the state of Illinois, most people are value-driven, looking for flexibility in a life insurance policy. Term life insurance offers solutions for individuals who need premiums that fit their budget and terms that work with an unpredictable lifestyle.

What is Term Life Insurance?

Term life insurance provides coverage for a limited amount of time or a “term”. As opposed to permanent life insurance which covers you for your entire life, term policies are purchased for short durations of time. Generally, these increments are 5, 10, 15, 20, 25 and 30 years. If the policyholder dies during the term, a beneficiary receives a death benefit. However, if the policyholder does not die and the term ends, he or she has the option to discontinue the policy or in most cases, pay increasing premiums to continue coverage.

Term life insurance is the lowest premium life insurance available. While there are no cash values that build over the life of the policy like with whole life insurance, premiums are usually less expensive and provide a cost effective way for securing a death benefit. Besides, if you have a mortgage, life insurance may provide a way to pay off an outstanding balance in the event you die. Term life insurance can be used effectively to protect your loved ones from having to pay the mortgage. Simply select the term that matches your mortgage payment period.

Term Life Insurance Options in Illinois

In Illinois, term life insurance plans are guaranteed and renewable. Basically, as long as the terms are upheld by the policyholder, the premium amount stays the same and the term life plan can be converted into a permanent life insurance plan after the policy expires.

Guaranteed Level Term Life Insurance

The Guaranteed Level term life insurance is by far the most common in Illinois because it can be purchased at a very low cost. Guaranteed Level term policies offer long term coverage and are available for 5, 10, 15, 20, 25, 30 years.

Return of Premium Term Life Insurance

This type of term life insurance policy offers a guaranteed refund of the life insurance premiums at the end of the coverage period. Generally, because of this advantage, these policies are more expensive than traditional term life insurance. However, in most cases, the premiums remain the same. In some cases, a cash surrender value may be offered if the policyholder does not die. Return of Premium term life insurance is generally available in 15, 20, 25 or 30 year terms.

Annually Renewable Term Life Insurance

The final type of term life insurance in Illinois is the least popular. Annually renewable term life insurance is an unpopular choice because premiums increase yearly to reflect the probability that the policyholder will die in a given year. This type of insurance is most advantageous if purchased for a small amount of time as in a year or two.

Understanding the various term life insurance policies available in Illinois can help you navigate the confusing world of insurance. If you are serious about purchasing term life insurance, take the time to find a qualified Illinois life insurance agent, like Senior Services of Illinois that have been providing life insurance solutions for decades.

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