Term Insurances

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Term insurance policy is the oldest and popular form of life insurance. Under term insurances, the insurance company promises to pay the sum insured, if the life insured dies within the period specified in the policy (5, 20, 15, 20 year term insurances) if the life insured is alive at the end of the period, the policy terminates on that date and the life insurance protection ceases.

There are 4 types of term insurance
1. Increasing term
The sum of insured increases automatically every year and the annual premium generally increases in step with the increases in the face amount of insurance coverage. A policy might be used to protect the value of a key employee in an organization, where the employee's salary is expected to increase every year.

2. Decreasing term
It is an endowment plan having below characteristics
a) Level premium
b) Fixed term period such as the 20th anniversary of the date of issue
c) Sum of insured decrease every year
d) Cash value increase
A decreasing need might also be to guarantee additional monthly income until the youngest child is through school.

3. Fixed-period term
Term insurance policies are commonly issued for specified periods, such as 1, 5, 10, 15, and 20 year. they are often issued to terminate at a specified age of the insured, generally at age 65. Very few traditional term insurance policies ever pay out a death benefit. Fixed term insurance is good for people just starting a family without a lot of cashes and assets.

4. Term to 100
Premiums paid in the early years are significantly higher than for other types of term policy. In the long term, term to 100 premiums established at the life insured's young attained age will likely be much lower than the attained age premiums charged to those policy owners in their 50s and 60s, under renewable term plans. The biggest single advantage of term insurance with shorter periods has always been its low initial annual premium cost. Term to 100 plans do not usually have any cash surrender values.


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