What is Term Life Insurance?
Term life insurance is a type of life insurance that provides coverage for a specific period, or "term," typically 10, 20, or 30 years. If the policyholder passes away during this term, their beneficiaries receive a death benefit. If the policyholder outlives the term, the coverage expires with no payout.
Key Features
Term life insurance provides temporary coverage for a set period, like until children are grown or a mortgage is paid off. It offers lower premiums than permanent life insurance but doesn’t build cash value. The policy only pays a death benefit if the insured passes away during the term.
Premiums
Premiums are fixed for the duration of the term and typically remain affordable because the policy does not accumulate cash value. They are based on factors such as the policyholder’s age, health, and the coverage amount.
Cash Value Growth
Term life insurance does not build cash value. The premiums only cover the death benefit, and there is no savings or investment component like in permanent policies.
Why Consider Term Life Insurance?
- Affordable: It offers high coverage at a lower cost compared to permanent life insurance.
- Simplicity: Ideal for those who only need life insurance for a specific period (e.g., until children are grown or a mortgage is paid off).
- Financial Security: Provides a financial safety net for your family or dependents in case of an unexpected death during the term.