Term Life Insurance


What is Term Life Insurance?

Term life insurance is a type of life insurance policy that pays a death benefit if the insured person dies during the period specified by the policy. Policy terms are usually expressed in years. Term products, unlike permanent life insurance policies, are intended to expire at a certain time. They also do not build cash value.

Who it is For

Term life insurance tends to benefit people who have temporary needs for life insurance. An example might be someone with children, who only needs coverage while the kids or still at home. Some people also buy term insurance for the duration of a financial need, such as a mortgage. This ensures that, in the event of their death, their loved ones will not be burdened with that expense.

How Term Life Insurance Works

The process of obtaining term life insurance begins with applying for a policy. Depending on the type of product selected, a medical exam might be required so the insurer can determine the level of mortality risk that the applicant presents. Once approved for the policy, periodic payments will be made to the insurer in exchange for the guarantee that the policy’s beneficiary will receive a predetermined death benefit in the event that the insured person dies while the policy is in force. Once the policy’s term ends, no more premiums are paid, and there are no more guarantees.

Different Types of Coverage in Existence

Term life is a type of temporary life insurance. Those seeking coverage that will not expire might consider universal or whole life insurance. These types of permanent policies come at a higher cost, but they do not come with the risk that someone might outlive their coverage. Universal and whole life policies also build cash value, from which loans can be taken.

Major Benefits of Term Life Insurance

One of the major benefits of term life insurance is that it is generally the least expensive type of policy. It also comes with the flexibility of being able to buy coverage for only the specific amount of time needed.