Term Life Insurance

Any life insurance policy that covers you for a specific, predetermined amount of time is a term life policy. Should you die during your policy's term, your beneficiaries will receive the payment - should the policy expire before you do, there is no pay out. Term insurance is generally the least expensive and least complicated type of life insurance. It provides insurance protection at a low cost for a specified period of time, such as 1, 10 or 20 years.


With term insurance, you're generally just paying for the death benefit, the lump sum payment your beneficiaries will receive. If you die within the term period, a death benefit is paid to your beneficiary. If you are still living at the end of the term, protection ceases unless the policy is renewed. Term policies are only insurance, they have no cash value or added savings feature.

Who's It For: People with a temporary need for life insurance protection.
Term insurance is often a good choice for people in their family-formation years,
especially if they're on a tight budget, because it allows them to buy high levels
of coverage when the need for protection is often greatest. Those who need a large amount of insurance protection but have limited budgets.

Benefits: They are as follows:

It provides insurance protection for a low cost.
Most Term policies allow you to convert your term policy to a permanent life.
insurance policy without having to take a medical exam or provide other information about your health.
Death benefits are generally received free from income tax.

Drawbacks To Consider: They are as follows:
Premiums generally increase with age and they could become unaffordable later in life.
Once the term period expires, the insurance coverage ceases and the policy has no protection for your life.
If you buy a term policy only to realize at the end of the term that you still have a need for life insurance? Well, it's sort of a good news, bad news story.
Many policies will give you the option to renew your policy when you reach the end of the term but you'll probably face much higher costs since age is one of key factors used to determine life insurance premiums.

Important Questions To Ask: Here are some important questions to ask yourself when considering the purchase of a term policy:

How long can I keep this policy?
Do I have the option to renew the policy or to convert it into a permanent life insurance?
Will I need a medical exam if I want to convert?
When will my premiums increase?