Term life insurance is the most basic form of life insurance. Term life insurance provides temporary protection for a specified, limited term of years specified in the policy. This is also the most common form of life insurance. If an insured is to die during the term of the policy, then the benefit will be paid to the beneficiary.
Term Life is pure insurance, with no cash value associated with it. Because the policy owner pays only for the cost of pure protection, term insurance premiums are smaller than permanent coverage. The premium on term life can go up as age goes up. There is usually a maximum age (75), after which the carrier will not offer term coverage or renew the policy.
Term life policies fit two types of needs:
1) To cover a temporary need.
2) To provide a large amount of coverage at a low cost.
While insurers add their own nuances, term life is typically available in three basic forms and it is based on how the face amount changes overtime.
1) Level term.
2) Decreasing term.
3) Increasing term.
Regardless of which type is purchased, the premium will remain level for the term of coverage. For sake of the length of this post I will focus on level term insurance as this is by far the most common form of term coverage. Level term offers the same death benefit and same premium for the life of the policy. At the end of the policy life, most level term policies are renewable or convertible. This allows the policy to be renewed and based on the current age of the insured, or converted into a whole life policy which I will discuss in future posts.
If you would like to learn more about term life policies, please contact Insurance for Veterans at 803-250-3709 or by email at firstname.lastname@example.org.