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How to Get Most from Life Insurance for 20 Years Term
While going for insurance policies, many people get confused with the two kinds of policies known as “whole life” insurance and “term life” insurance. Many people are not clear about their differences. Let us first of all try to understand what is “term life” insurance? The term life insurance can vary between the periods from 5 to 30 years, when the insurance will be in force. Let us take life insurance 20 year term as an example. This term insurance will continue for the period of 20 years. Some of the term insurance are valid for one year only, however, majority of them are 10, 20 or 30 years term policies.
Another thing about the “term insurance” is that in this insurance policy, no investment components is attached with it. This component is present if you buy any “whole life” insurance cover.
Therefore, if you compare the premiums of any 20 years term life insurance with whole life insurance of the same value of insurance, you will find plenty of difference in their premium. Term insurance is cheaper way to get you insured for any fixed amount of time.
Normally, premiums in this type of insurance are lower than those of permanent policies. The length of the insurance is directly proportional to the term length. A 10-year one will offer fewer premiums than a longer termed one. Level term policy however, is less expensive than insurances that are renewable annually.
You may wonder what amount of level insurance you need. This depends on various factors like your estimated funeral costs, debts left behind, and long-term needs of the beneficiary. If you are married and have children, your coverage needs to be higher than that of an unmarried with no dependents. In general, the policy should cover the insured annual income at least 6 to 10 times.
To apply for this policy, one will need to complete an application form given by the respective company. These questions in most cases are personal and medical in nature. A medical test will most probably be required. This test is taken by a doctor and sent to the company. Some companies however offer level term policies without requiring a test. However in long terms like a 20-year term life insurance, a cap is usually placed.
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