A 10-year insurance policy is a contract that provides coverage for a specific period of 10 years. The type of coverage and benefits vary depending on the specific insurance product. A common example is 10-year term life insurance, detailed below.
10-Year Term Life Insurance Explained
A 10-year term life insurance policy is a type of life insurance that provides coverage for a fixed period of 10 years. Here's a breakdown of its key aspects:
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Coverage Period: The policy is active for exactly 10 years from the date it becomes effective.
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Death Benefit: If the insured person dies within those 10 years, the insurance company pays a pre-determined amount (the death benefit) to the designated beneficiaries.
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Purpose of the Death Benefit: This benefit can be used to:
- Help replace lost income.
- Pay off debts, such as a mortgage or student loans.
- Fund future expenses like college savings.
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Expiration: If the insured person is still alive after 10 years, the policy expires, and coverage ceases. There is typically no payout.
Key Features of a 10-Year Term Life Insurance Policy
| Feature | Description |
|---|---|
| Term Length | 10 years |
| Death Benefit | Paid to beneficiaries if death occurs within the 10-year term. |
| Premiums | Typically lower than permanent life insurance, but may increase with age if renewing the policy later. |
| Expiration | Policy expires after 10 years with no payout if the insured is still alive. |
