Temporary Life Insurance is one of the basic types of insurance policies; the other being Permanent Life Insurance. This policy is in force only for a limited period of time and therefore temporary in nature. Temporary Life Insurance is a term used in the United States whereas in the United Kingdom it is referred to as Term Assurance.
A vital aspect to consider at the time of purchasing Temporary Life coverage is whether or not the insurance provider guarantees renewal on expiry of the policy. Such a guarantee assures that policyholders will be able to acquire some protection if for some reason they are no longer insured. Moreover, such a guarantee offsets the temporary nature of such a policy.
In fact policyholders should demand such a guarantee of policy renewal. The Term Insurance does not accumulate any cash value and any benefits are passed on to the beneficiary only after the death of the policyholder. As a result, such an insurance policy is least attractive in spite of the low cost.
Temporary Life coverage is a tool that offers financial protection to the beneficiary of the deceased policyholder. As such, it does not benefit the policyholder during the life time of the policy holder except that it offers the necessary financial protection in the event of death. However, life insurance cannot be viewed as an inheritance or a consolation prize for the loss of life since human life is immeasurable in economic measure or value.
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However, Temporary coverage is quite beneficial when applying for Life Insurance. The extra comfort derived from such insurance is well worth the initial premium outlay. Also, the insurance company returns the premium to the policy buyer in case the application is rejected or if the policy buyer declines the policy offer.
Thus, Life Insurance is an essential component that offers future financial protection for the dependents in the event of the death of the policyholder. Sometimes, Temporary Life coverage is also termed as Pure Insurance that does not provide any cash value. A major advantage offered by such insurance is that policyholders can cancel the policy for any reason. On the other hand, Permanent Insurance builds cash value that reduces the amount at risk for the insurance company. However, a major drawback of such a policy is that the policyholder cannot cancel it under any circumstances.
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