Looking to purchase term life insurance? Confused about what it is, or how much you need to buy? Term life insurance is the simplest, most straightforward form of protection you can purchase for yourself and your family.
Term Life Insurance
Term life insurance is basically life insurance that covers a specific period, or ‘term’. With term life insurance, you will typically pay premiums on a monthly or annual basis. During that period your family is protected. Once that period is over, it will be up to you whether you renew or to let the coverage end.
This is different than permanent life insurance, which is designed to offer you life-long coverage.
With term life insurance, you can choose from a variety of different products, choosing those that best fit your needs, time frame, and budget.
What Term Life Insurance Can Do For You
- Help provide for your family in the event of a loss of income
- Cover any short-term debts and needs
- Provide additional insurance protection as you raise your children
- Provide extra time and assistance to pay off a mortgage or help pay for a college education
Characteristics of Term Life Insurance
- Low-cost policies
- No cash value
- Option to convert to permanent life insurance policies
Term Life Insurance Basics
Term life insurance policies offer a specific, stated benefit upon the death of the policy owner if the death happens during the specified term. These types of policies, however, will not provide a return beyond the amount of insurance purchased. There is no cash value like you will find with permanent life insurance policies. With term life, the value of the policy, and the payout do not increase.
Term life is also referred to as ‘pure life insurance’ because it only insures against the loss of life. The premiums you pay are used solely to cover the cost of insurance protection.
Premiums for Term Life
The premiums for term life insurance vary based on a person’s age, sex, his or her health and their life expectancy. To accurately determine your health before a policy is issued, you will need to have a medical exam. Other factors which may be considered are driving records, medications, smoker or non-smoker status, occupation and family history.
If the covered person dies during the specified term, the insurer pays the face value of the policy. But, if the term expires before the insured’s death, there is no payout, as the policy is no longer valid. You can renew term policies, but the premiums will often change based on the current age of the person to be covered.
Because these policies are for shorter amounts of time than permanent life insurance, the pay is for a set death benefit, term life is the least expensive kind of insurance you can purchase. Generally, the younger a person is when they purchase term life policy, the cheaper the premiums because people are statistically less likely to die between the ages of 25 and 35 than they are between the ages of 50 and 60.
Have questions about term life insurance? Contact us today!