TERM LIFE INSURANCE
Term life insurance policies offer fixed premiums for set periods of time, such as 10, 20, or 30 years, and if you die during that time period, the death benefit is paid to your beneficiary. While this is an inexpensive way to protect your family or business from a premature death, you are actually “renting” your death benefit coverage. Also, term life insurance typically does not have a savings component.
If you are still alive when the level premium period ends and want to keep the same coverage, premiums will usually increase significantly each year thereafter. Many term products may be convertible to permanent insurance without going through additional medical underwriting; however, the conversion periods and products available for conversion will vary by carrier and age.
Term life insurance usually lacks premium and death benefit flexibility during the set term.
In general, term life insurance is well-suited for:
Temporary coverage needs (i.e., until children graduate college, to pay-off mortgage, protection in short-term agreements, etc.).
Those who desire coverage for a certain period of time at the lowest cost.