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Life insurance is a policy which provides a
stated benefit upon the holder's death, it's a contract between an
insurance company and an individual, a protection against the lost income
that would result if the insured were to pass away. The named beneficiary
receives the proceeds and is thereby safeguarded from the financial impact
of the death of the insured.
Term life insurance is life insurance coverage
at a guaranteed rate for a specified period of time,
it's acontract that provides a death
benefit but no cash build-up or investment component. The premium remains
constant only for a specified term of years, and the policy is usually
renewable at the end of each term. Life insurance that provides a death
benefit only if the insured dies during the period specified in the policy.
If the insured survives until the end of the period, coverage ceases
without value. Contrast with permanent life insurance. Term life insurance
provides protection for a limited period of time and pays benefits only if
you die during the specified term. Term policies have a fixed premium for
the length of the policy, these premiums are usually increased when you
renew a policy because you are older and your chances of dying have
increased - this risk is reflected in your insurance costs A 10 year term
policy will begin with lower premiums, but a 20 year term policy will end
up with lower premiums.
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