Term Life Insurance

Term Life Insurance is the most basic type of life insurance and is the most affordable.

Term insurance is designed to provide death protection for a specific and limited period of time such as 10, 15, 20, or 25 years. During this period of time premiums (i.e. rates) are set a fixed level. Afterwards the policy resorts to the renewal stage where insurance coverage is still provided, but the rates increase annually. If the insured dies while the policy is in force, the policy will "mature" meaning the insurance company pays the the face value (aka death benefit) to the policy's beneficiaries. If the insured is still living at the end of the policy's term, the policy will expire.

Term insurance in its many forms is the most affordable protection available for the premium dollar. It is particularly suitable for a person who has a temporary need for insurance, for a person who may want permanent insurance in the future, or for the person who has the discipline to buy Term and  invest the rest.

Many policies contain a convertibility option, which allows the policy owner to convert the term policy to permanent insurance (such as whole life or universal life) without the need for a medical exam.

Some key features:

• There is no investment component of term insurance. You simply pay for and get pure life insurance
• A term life insurance policy will provide coverage for a specific period of time. This is generally for 10, 15, or 20 years. If the insured dies during that this period, the policy's beneficiary's will receives the face value of the policy.
• There is no investment component, such as what is available in Universal and Whole Life policies.
• If the policy expires or is cancelled no death benefit payout will be due.
• Term is generally sought out by individuals not wishing to insure their estate, but rather desiring to insure a specific period of their lives.

There are six important types of Term Life Insurance. Many policies contain combinations

Level Term - Provides a specific and constant amount of insurance throughout the life of the contract. generally 10, 15, 20, or 25 years

Decreasing Term - If the insurance needs of the policy owner decrease over a period of time, it would be appropriate to purchase a policy where the death benefit also decreases. An example would be where the insured mortgage payments have ceased whereby eliminating the need for mortgage protection. Were a level Term policy be purchased this event would create an excess of insurance coverage.

Increasing Term -  If the insurance needs of the policy owner increase over a period of time, it would be appropriate to purchase a policy where the death benefit also increases. Increasing term is more expensive than Level Term.

Renewable Term - This feature provides the policy owner with the right to renew the policy without showing proof on insurability. During the renewal stage, insurance coverage is still provided, but the rates increase annually.

Convertible Term - With this form of Term Insurance comes the right to renew a Term policy to a new for of permanent insurance without having to show proof of insurability

Return of premium - Insured pays an increased premium and receives all cost of insurance costs back at the end of the policies fixed term period, providing no death benefit was paid.