question about term life insurance trying to figure out something,?
question about term life insurance trying to figure out something,?
If a person brought a 400,00 term life insurance policy how much would the family get upon death. How exactly does this work. I know the insurance company just give the family 400,000 upon death, if that was the case everyone would have insurance. So, how exactly does this work?
Best answer:
Answer by Financial Representative
Just like any other types of insurance, if you pay your premiums, you remain covered. In life insurance, if you die and you paid your premiums, your beneficiary will get the death benefit. In your example, it would be $ 400,000.
Keep in mind, a beneficiary can be anyone. It doesn’t have to be a family member, though it should be.
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Term life insurance is great for a young person, say a young man in his early 20s. The reason it is good for a young person is their health is usually good but there is a catch, it is called Term insurance for a reason.
After 20 yrs it usually runs out or the payments sky rocket. That is why when the 20 years are almost up it should be converted to whole life insurance. Whole life ensures your family gets what you put in.
Don’t buy from the bank they are bankers not insurance agents. a 2 month course does not qualify them to know all there is to know about insurance.
Please check around and find an established firm, and preferably an agent that has at least 15 years experience.
I hope this was helpful :)
They would get $ 400,000. If you buy $ 1,000,000 they get $ 1,000,000. It’s that simple. There is no formula or anything. You die, your beneficiary gets the stated amount. Naturally if you list two beneficiaries they split it.
Yes, knowing that makes you wonder why some people don’t have life insurance when they have a family to protect. Especially when you consider how cheap it is.
Churches don’t have bake sales for the well insured….
If they bought a $ 400,000 life insurance policy, and it’s straight term, they’d get 400,000. Or, whoever the beneficiary is, would get that amount.
That’s how it works. It’s pretty straight forward. I’m not understanding your confusion.
The death benefit is paid to the beneficiary or beneficiaries named by the insured party - and ONLY the named beneficiaries. That doesn’t necessarily mean “the whole family.”
That’s how it works. You pay a regular premium for the term life insurance and your family collects the $ 400,000 if you die within the designated term period.
The catch you ask? The insurance company collects enough small premiums from thousands of individuals like you to be able to pay the $ 400,000 to the few people that die. The probability of someone dying who is relatively young and healthy is very low.
Then you might ask, why would I buy a 10 year term life insurance policy if there is only a 1 in 100 chance I’m going to die in the next 10 years. Well a 1% chance that your wife and kids have no money and no income and lose the house and everything you have worked to give them if something were to happen to you is pretty scary. And while it would be very difficult for most people to save up $ 400,000 early in life it is not very hard for them to pay $ 20 a month for that security.