Temporary or Term Life Insurance
Term (or Temporary) Life Insurance is the purest form of investment because it merely insures your life. It is not an investment for your savings and there is no return of cash at the end of the term. Term Life Insurance is life insurance in its original form and remains the best kind of insurance you can take, if you feel you need life insurance for a limited period.
The probability of a random death occurring within a fixed term is quite low, whereas with permanent life insurance, the insurance company is providing cover for a definite eventual death and therefore does charge very high premiums to make the insured literally “self-insure” themselves. So, compared to forms of Permanent Life Insurance (like whole life insurance, universal life insurance or variable universal life insurance), Term Life Insurance is the least expensive, and allows for a substantial coverage at a much lower cost.
If you are not looking for an investment for your surplus cash, but you do need to have a financial safety net for your family who are dependant on you, then this may be the answer for you. Term Life, is just that, it is insurance for a term or period of time which you decide on for your convenience; usually 1 year, or multiples of 5 (for example, 5, 10, 15, 20 years). Term Life Insurance gives you the liberty and luxury of being able to insure your life, thus buying security for your dependants, at a time when permanent life insurance premiums may appear prohibitive to you. There are all kinds of circumstances under which Term Life Insurance becomes both attractive and welcome.
Without having to pay out the higher premiums demanded by forms of permanent life insurance, you can insure yourself for the time it will take your youngest child to finish college (including all tuitions), until you pay off your mortgage or any other outstanding debts, or even till the age you have decided to retire. This keeps your family financially protected and secure against unforeseen and unfortunate events.
The longer-term policies have higher premiums, as your “reinsurability” does lessen with every passing year, so you have the option of taking a one-year policy and renewing it every year (paying progressively higher premiums). Alternatively, you can calculate the difference between, say, a fifteen-year policy and an annually renewable policy and decide which one is suitable for you.
Of course, the younger you are (and therefore less likely to die!), the more substantial the coverage will be that you can get at a lower price.
Many insurance companies offer Term Life Insurance and today most of them are on the internet. As there are some variations in the length of time that you can take this policy (renewable term insurance, annual renewable term insurance, level premium term insurance, etc), it is a good idea to do proper research before coming to a decision.
All companies are willing to give quotes online, so you will be able to compare prices. Some more research will also reveal the most reliable companies, reputed to pay out claims quickly and with a minimum of fuss. If you do have a critical period in your life, where life insurance at an affordable price will bring a sense of security to all concerned, you really cannot find anything much better than Term Life Insurance.