What is the best term life insurance policy?
Term life insurance definitely belongs on the list of most important insurance policies for those who are not only thinking about the now and themselves, but also want to help next of kin in the future. After all, this insurance can help your loved ones financially after your death, as they receive a fixed amount of money to compensate for a loss of income.
As is the case with all insurance, there are different types of term life insurance. It pays to do research on them before effectively making a choice.
What exactly is the best term life insurance policy? You can read more in the following piece.
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What is the best term life insurance policy?
Three types of whole life insurance can be distinguished in the Netherlands:
- The equal death benefit insurance policy
- The linear decreasing life insurance policy
- The annuitizing term life insurance policy
Below is some more info on each of these forms:
The equal death benefit insurance policy
With this insurance, the monthly premium you pay remains the same every month and every year. Therefore, this is the best term life insurance for those who want to have clear visibility of their monthly costs now and in the future and keep them stable. The final amount of money paid out is the highest with this form of insurance of all three forms.
The linear decreasing life insurance policy
Linearly decreasing term life insurance, in turn, means that your premium continues to decrease each year. This is very interesting if you want to pay less for your insurance in the long run. On the other hand, the final sum insured is then a lot lower.
The annuitizing term life insurance policy
Finally, there is also annuity-based term life insurance, where the monthly premium decreases by a certain percentage each year. Here too, the final amount paid out is lower than in the case of constant insurance, but still slightly higher compared to linear decreasing term life insurance.
What factors go into finding the best term life insurance policy?
In addition to the fact that there are different types of term life insurance, it is also important to consider a number of factors when looking for the best option. Below, we go into a little more detail about these:
1. The benefit and what it is used for
Your insurer will pay the insured amount of your term life insurance to your family or household if you die before a predetermined date. That date is determined when the insurance policy itself takes effect. The amount paid out can then be used by your next of kin to pay off a mortgage, for example. In certain situations this is even mandatory, so keep that in mind.
On the other hand, it is also possible to place this amount of money in a savings account, for example to supplement the lost income. Finally, survivors sometimes choose to pay off any other debts or payments with the benefit.
2. The amount of the premium
Next, when looking for the best term life insurance policy, you need to consider the premium involved. How is it determined? Based on several factors, including the amount insured, your own age, your health status at the time you take out the insurance and more.
It is important to remember that non-smokers in particular enjoy an interesting discount on their term life insurance. This is because the risk of death is largely determined by the policyholder's lifestyle and health risks.
3. The term of the insurance
Life insurance term is a factor that is often underestimated, but does matter when looking for a good insurance policy or insurer. The good news is that in most cases you can somewhat choose how long the insurance runs, although most insurers do have a minimum and maximum duration.
Here, always note the effect of the term on the premium you pay per month. The longer a life insurance policy is active, the more you will pay monthly. Why? Because with long-term insurance, the financial risks are a lot higher for the insurer.
4. Any differences between insurers
Finally, there will always be differences between insurers when it comes to the premium and the insurance itself. It certainly pays to weigh different options against each other so you know what to expect.
What is important here is that you carefully check the terms and conditions of the insurer you have your eye on. For example, there may be certain restrictive measures related to the term of the insurance, payout method and more.