The mute point is that although the term life is a low cost life insurance policy, it is financially as viable as any other policy is. There is no deception or false promises. Buy a term life insurance to cover your insurance need and live in peace.
The insurance carriers are here to do business and to earn a profit. Their business model can simply be put as - Profit = earned premium + investment income – incurred loss – underwriting expenses. Although many of us believe that the main income of a life insurance carrier comes from the amount they invest, that is not true. It mainly comes from the ‘earned premium’. Greater is the ‘earned premium’ and lesser is the ‘incurred loss’ higher will be the profit.
In other words, the policy to be viable should have great many buyers, but most of them should ideally be healthy enough to outlive the insurable age so that the death benefit is not claimed. Now, to reach greater number of buyers, a life insurance policy needs to have cheap rates, but adequate death benefit. The term life insurance is one such low cost life insurance policy that offers great benefit at reasonable rates. Although the earned premium is not that high because the rates are quite low, especially where the person to be insured is young and healthy, it makes a tidy profit for the carrier because the ‘incurred loss’ is negligible.
The term life, as its name implies, is valid for a fixed term only. An unauthorized survey has shown that less than 1% of the insured dies while the policy is in force and so most of the time the policy lapses without paying up. Of course, such statistics must not encourage you to stay uncovered, because you may fall under that 1% insured that dies within the term. Under such circumstances, your family will have a harrowing time without any kind of support if you indeed die a premature death.
However, that was not the point of discussion. The mute point is that although the term life is a low cost life insurance policy, it is financially as viable as any other policy is and so you need not fear any kind of deception or false promise. Buy a term life insurance to cover your insurance need and live in peace knowing that your family will have adequate support in case of your premature death.
However, there are different types of term life policies and not all of them have affordable rates. If you are looking for low cost life insurance, go for the fully underwritten term life policy that requires one to undertake the mandatory medical examination. Although such policies take weeks to be issued, they have the most affordable rates. There is also an instant term life insurance policy that is offered almost overnight. They are also known as life insurance no exam because they do not require you to take any kind of paramedical test.
The life insurance rates for these instant term life policies are high because in the absence of a physical test, the insurability of the person cannot be determined properly. Because there is a chance of higher ‘incurred loss’, the ‘earned premium’ has to be higher. However, that does not mean that anybody and everybody can get coverage under it. You still need to qualify. In fact, the coverage is based on:
Answers to the health questions asked
Report from Medical Information Bank
Motor Vehicle Report
Allied sources
The main advantage of these instant term life insurance is that the whole procedure can be completed online only. There is no visit by the insurance executives or paramedical nurses. Many people buy such a policy for that reason. However, if you are one of the millions who need to count every penny they spend, you will not buy it just for that. You may opt for it if you need additional coverage instantly. For regular coverage, you are sure to opt for those fully underwritten low cost term life insurance policy.
There are other low cost life insurance policies too. However, it is important to find out what kind of benefit they offer. Is such benefit adequate for your insurance need? Otherwise, there is no point in buying such policies. Therefore, before you buy a policy inquire about the benefit first and then see that the rates are affordable for you. In fact, both of these criteria are equally important. The term life is so popular because of this reason only. It is the only policy that provides sufficient benefit at affordable rates. Buy term life to receive enough coverage at lowest possible rates.
Article by David Livingston of EQuote - on cheap term life insurance in the country.
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