The term life insurance is an important safeguard for families. If a death occurs, this can lead to a considerable financial burden for the relatives. For example, if the head of the family dies, the term life insurance can provide financial help for the surviving dependents. Business partners can also protect themselves against the financial risk of a partner’s death.
Why a life insurance?
The term life insurance covers death of the insured person. The annual premiums for this are not so high, especially if the term insurance is concluded early. In contrast to a capital life insurance, savings capital is not created at the same time. Therefore, a term life insurance costs less than possible alternatives such as occupational disability insurance. The term life insurance, however, only in an absolute emergency: If the insured dies.
With a risk life insurance can make sense. With her, the survivors can secure their existence. Because she pays the agreed sum at the death of a partner – tax-free. From the first contribution the full insurance cover applies.
Cost of a term life insurance
The tariffs are calculated by term life insurance according to individual risk. Anyone who is older, has pre-existing conditions or has risky hobbies must expect higher costs. Even smokers have to accept higher contributions. In addition, the amount of the sum insured is decisive. Health questions that serve to calculate the risk of damage should always be answered truthfully by the policyholder. Otherwise, the insurer has the right to refuse benefits.
Who needs a term life insurance?
A term life insurance is particularly suitable for hedging, if you have a family or planning to start one soon. Because if something happens to you, your survivors not only have to cope with the emotional loss. Also, financial losses are often associated with a death, especially if the main earner is affected. Depending on financial needs, the sum insured can be set individually. This will enable you to provide your family with a long-term financial cushion.
Application areas of term life insurance
The term life insurance can be used for different purposes
- Protection of relatives in the event of death
- Protection of business partners
- Securing a loan agreement or ongoing financing
Especially in small companies, the death of a business partner can have significant consequences for the further financial success of the company. In order to compensate for this, business partners, but also spouses can hedge by means of an associated term life insurance. This pays when one of the two insured dies.
An affiliated life insurance secures spouse or business partner. The advantage of this is that this form of life insurance is cheaper than two individual contracts. It is especially worthwhile if, for example, both spouses contribute to the income.
Flexible term life insurance
Flexible term life insurance policies adapt to the life circumstances of the insured person. Thus, this variant of term life insurance can also be used to hedge a loan agreement. The sum insured will decrease in the course of time to the same extent as the credit debt. This reduces the contributions at the end of the contract period. It is also possible that the sum insured will increase gradually. Thus, inflation, but also the rising standard of living can be compensated.
Cheap term life insurance
For the insurance cover of a term life insurance, the contributions do not have to be high. Good, but also cheap insurance policies are offered from 177 euros per year. Of course, the premium depends on various factors such as age, health and hobbies. According to a calculation example of the Stiftung Warentest, a 27-year-old non-smoker pays an annual contribution of 177 euros for a favorable term life insurance if the insured sum is 150,000 euros. If the policyholder is already 34 years old when concluding the contract, the annual fee will increase to 223 euros.