The benefit period, also known as a coverage period, refers to the time period during which an insured event is covered by an insurance policy. Such a contract does not cover losses outside of the benefit period.
Although benefit periods usually refer to life and healthcare insurance policies, all insurance policies have benefit periods. For instance, long-term care, homeowners insurance and auto insurance policies all have coverage periods. Their length depends on the policy type, insurance provider, and policy premium.
The benefit period of a life insurance policy refers to how long it will last before expiring. In other words, if the insured dies during the benefit period, their beneficiaries will receive the policy’s death benefit funds.
The length of your benefit period, or coverage period, is an essential consideration when you purchase life insurance. It is recommended that you opt for a length that will protect your financial obligations in accordance with your specific status and needs. On the other hand, you should avoid investing in a benefit period that is so long that you are paying for unnecessary coverage. Typical life insurance benefit periods last anywhere between 10 to 30 years, although some insurance companies offer additional coverage for up to 40 years.
It is important to address the reason you are purchasing the policy while determining the life insurance benefit period. In most cases, life insurance policies are purchased in order to financially protect beneficiaries in the event of a death. While deciding on the duration of a life insurance benefit period, there are a few critical factors to consider:
Purchasing the insurance policy with the right benefit period for your personal circumstances is crucial. Choosing the suitable benefit period is a personal decision based on one's financial obligations, budget, and preferences. Therefore, it is highly advised to consult with a professional before purchasing any type of life insurance to ensure you are making the right choices for you and your family.