Extended Term Insurance - Basic Information on How It Works

Posted by ankita on July 22nd, 2016

Many families overlook the need for insurance and do not include it in their list of factors to consider when they are planning the financial future. An extended term insurance is a form of life insurance but it is formulated to make the whole package of a life insurance more attractive to the client. This has a non-forfeiture option which utilizes the cash value of the ordinary life insurance policy as a single premium to buy the insurance at the same amount as that of the original policy. The term of the policy can mature depending on two factors: the size of the cash value and the age of the insured individual.

If someone buys a whole life insurance policy, a part of that premium which they are paying for will go towards amassing a cash balance. Through the years, that amassed cash amount has the potential to grow considerably. Now, if the individual does not continue paying the insurance premiums they would have to give up or forfeit the total cash amount in favor of the insurance company. One way that could prevent this problem from happening is if the life insurance company would begin a non-forfeiture option called the extended term. There is usually a provision in many of the life insurance policies which can give the insured the alternative to continue with the existing amount of insurance for the same length of time as when they first signed the contract when they bought the insurance.

The extended term insurance is usually extended to an insurance policy holder who could no longer afford to continue their payments for the premiums. Instead, they would now be given the extended term insurance. The insurance company will then take the leftover balance of the money for the policy and they would use that sum to buy the term insurance. The policy holder would now be fully covered by a term life insurance policy that could last to a specific length of time. The length of the term insurance policy would now only depend on how much the balance of the money was at that time the policy holder gave up his policy payments.

If you would like to learn more about extended term insurance.

ankita

About the Author

ankita
Joined: July 16th, 2016
Articles Posted: 67

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