What is Term Life Insurance?

Term life insurance is the basic form of insurance protection. It is also considered as temporary life insurance protection. It provides insurance protection only for a specified period of time and no attached living benefits. The advantage of this is its cheapness or affordability. It is offered at a specified period such as one, five, ten, or twenty years or up to 60, 65 or 70.

Insurance benefit is only paid when the policy owner dies. If the policy owner outlives the specified term period, payments made are not reimbursed but it can be renewed or converted into a permanent insurance policy depending on the provisions agreed on the time of contract signing.

Types of Term Insurance.

  • Level Term. For a specific period of time, the protection afforded to the policy owner remains constant throughout the term period.
  • Decreasing Term. With this type of term insurance, the amount payable at death decreases constantly. By the end of the term period, the death benefit is reduced to zero.

Provisions in Term Life Insurance Policies

  • Convertible. If term life insurance is convertible, the policy owner has the right to convert it into a permanent insurance with no proof of insurability required. This should be applied for before the contract expires.
  • Renewable. If term policies are renewable, owners can renew their contract for an extended period before the current term period expires without having to prove their insurability.

4 comments

  • Rick Vaughn

    Good info, I have been thinking about an investment in Life insurance. Looks like you have quite a few good post here.

  • Term Life Insurance

    Good article! The risk of this is that the individual decides to discontinue the coverage or does not meet the premiums on the coverage then they insurer does not have to cover any of the cost. This is simply risk protection.

  • Byron Udell

    You also may want to talk about return of premium term life insurance policies or ROP policies. These are policies that are a little more expensive then a regular term life insurance policy, but at the end of the term (20 or 30 years) you get all of your premiums back if you’re still alive.

  • ravi

    it a gd article about the def of tern=m life insurance.
    good content .
    keep posting more info about that.