There are many different types of life insurance offered by a variety of different insurance companies. Different policies, coverage amounts and even the option to have the life insurance policy build cash value may all be important factors to consider.
One of the types of life insurance popular for individuals in New Jersey is a term life insurance policy. It is called “term” as the insurance will cover a specific amount of time, usually between one and twenty years. The one-year policies can be renewed annually, allowing for the insured individual to opt out of the coverage on an annual basis.
The Cost
As the term life insurance has a maximum duration, insurance companies often provide low monthly or annual rates on these policies, particularly for younger, healthy adults.
The lower cost of term life makes it a good choice when the individual has other financial obligations. Should the insured individual die during the coverage period, the named beneficiary will receive a lump-sum payment for the value of the policy. This lump sum payment is tax-free.
Another advantage to this type of policy is there is typically very limited health information required by the insurance company. However, there may be some health issues which can prevent the life insurance company from covering an individual. Health issues can also impact the quote on the policy.
The Advantages
With a low monthly payment for even large policies, this is a great option for younger adults who may not want to invest in a whole life policy or a universal life policy.
There is no cash value for a term life insurance, but with the ability to opt out it is possible to change from a term life to a whole or universal life policy as the individual’s coverage needs and financial situations change.
