For some reason I always seem to receive a lot of mail this time of year on the subject of Life Insurance. Most want to know the benefits or pitfalls of Term Life Insurance over Permanent Life Insurance.
Term Life Insurance is by far the most cost effective way of securing a life insurance policy available to the general public. Term Life Insurance covers a specific period of time – normally the policy will run for periods of 5, 10, and 20 years. As the age of the insured increases, the cost of the premium will increase. Premiums are calculated on the mortality rate, which is usually dependent on the persons age, sex and whether that person uses tobacco.
This type of policy allows the insured or the owner to pay a set premium for an agreed period. The Insurance company provides monetary benefits to the beneficiary in case of death of the insured during that period. Usually, the benefits received on the death of the insured is income tax free.
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(1) the owner is the one who pays the premium;
(2) the insured is the one on whose death, a death benefit (face value) will go to the beneficiary;
