What Is Term Life Insurance



When asked, what is term life insurance, many insurance companies will tell you that it is the simplest and sometimes the most common type of life insurance policy they provide.

This type of policy provides death protection for a set amount of time.

Unlike whole life insurance which continues for as long as your lifetime, term life insurance is for only a specific amount of time.

It came about to help offer temporary life insurance during those times during life when it is most needed, but at a lower cost than whole life insurance.

It can be an affordable way for you to protect your family.

What Is Term Life Insurance To You?

Term life insurance is available in large amounts at a low initial premium. Because of this, policyholders use it to help them reach short-term financial goals.

Policies range in terms based on the insurance company that the policy is available through. Policies may be as short as five years, or up to 30 years.

The insurance policy holder may renew the policy throughout their lifetime. It is important to note that premiums will likely rise as the policyholder renews it. In most states, the policies may be held through age 80, 85 or 90.

What Is Term Life Insurance Beneficial For?

Several key benefits are available to those who purchase term life insurance.

The primary initial benefit is the lower premium cost.

This allows the policyholder to have protection even on a limited budget.

This type of policy is ideal for those who have specific life situations they wish to protect their family from should they die unexpectedly.

For example, many people will have term life insurance while they have a mortgage loan. Should the covered individual die, the benefits from the insurance can cover the cost of the mortgage loan. See tips on Mortgage Insurance

There are a few important things to know about this type of life insurance policy:

  • The insurance company may adjust premiums throughout the policy period. Raising and lowering premiums change based on investment earnings, expenses and the mortality
  • There is a maximum premium stated on most policies. Premiums may not increase over that amount.
  • Term life insurance policies are renewable.
  • Most policies are convertible to whole life, or permanent life insurance, through a specific age (defined by the insurance company.)

Many people find that this type of policy provides adequate protection for their immediate needs in an affordable manner.





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