Term Life Insurance

What Is Term Life Insurance?

Term life insurance is the simplest form of life insurance. Term life provides protection for a specific period of time. It pays a benefit only if you die during the term.

If you live beyond the specified term, the policy expires without value. It is sometimes called temporary life insurance.

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Policies generally last for 1, 5, 10, 15, 20 or 30 years.

Some policies can be renewed when you reach the end of the term. The premium rates increase at each renewal date. Many policies require that you present evidence of insurability at renewal to qualify for lower rates.

Some policies are convertible. They guarantee the right to switch or "convert" to one of the company's permanent life policies. Conversion rights usually guarantee that you will be accepted for the permanent life policy regardless of your health when you convert.

Term Insurance Advantages

Initial premiums generally are lower than those for permanent insurance, allowing you to buy higher levels of coverage at a younger age when the need for protection often is greatest.

It's good for covering needs that will disappear in time, such as mortgages or car loans.

Term Insurance Disadvantages

Premiums increase as you grow older.

Coverage may terminate at the end of the term or become too expensive to continue.

The policy generally doesn't offer cash value or paid-up insurance.