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| Term Life Insurance |
Term life insurance is the most basic form of life insurance. It usually provides affordable protection, often with a guaranteed premium, for some period of time. If the insured should die while the policy is in force, the face amount is paid to the named beneficiary. At the end of the premium guarantee period, the insured can renew the coverage at a higher premium. The premium for term life insurance is initially lower than a comparable permanent insurance policy; however, it can increase at each renewal. This initial lower premium usually makes term insurance an ideal choice for individuals with a temporary need for life insurance protection.
Term life insurance policies offer insurance protection for a specified term or period of time-typically, one, five, ten, 15, 20 or 30 years, or until a specific age (65 years). Premiums may increase each year (annually renewable term) or remain level for a set period (level term), and the insurance is generally less expensive than permanent (cash value) life insurance.
At the end of the term period the policy may contain a provision permitting it to be renewed without a medical exam, although the premium rate probably will be higher. Some term life insurance policies include an option to convert to a permanent life insurance policy.
Term life insurance is typically purchased by individuals who need insurance coverage for a temporary period of time (e.g. mortgage coverage) or who need a large amount of life insurance at the lowest possible cost. |
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