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What is term life insurance?

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2015-10-23 06:30:45
2015-10-23 06:30:45
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Term life insurance is the simplest, and usually the cheapest, form of life insurance. Term life insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. If you are living the policy expires without value. It is sometimes called temporary life insurance.


Term Life Insurance

There are different types of term insurance: Annual renewable term, decreasing term, and level term. Level term usually is the best because the premiums and coverage are level for a specific period of time: 5, 10, 15, 20, 25, 30 years. Buying level term and investing the difference in premium (had you bought a cash value policy such as whole life, universal life, or variable life) you'll most likely (99.99% of the time) have more coverage and more cash accumulated in the long run. By separating insurance and savings, you are able to maximize each and get the best return and coverage available. The point of level term, is once the kids are gone, the debt is minimal, and retirement savings is there, why pay for life insurance? At this point you are self insured and you can cancel the life insurance. But when you NEEDED it, you had it, and it was cheap.

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Remember if you buy term life, when the term ends so does the insurance. Also all the money you spent on it is gone.There is the possibility that the premiums will increase as the policy goes on.

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Term life insurance provides protection for a specified amount of time (or term) and pays benefits only if the individual dies during that period. Term policies can be sold in terms of number of years like (1 year, 5 year, or 10 year) or in terms of individual's age (term to age 50, or term to age 65). There are three basic types of term insurance:

Level term insurance - provides a level amount of protections throughout life of the policy


Decreasing term insurance - provides protection in which the amount gradually decreases throughout the life of the policy. This coverage is typically sold for individuals that want to protect family members from current liabilities such as a mortgage. As the mortgage is paid off the need for the higher payout upon death is reduced therefore this coverage decreases not only the payout upon death as time goes by but also has lower premiums.


Increasing term insurance- As you may have guessed this policy is the opposite of decreasing term insurance. In this form the protection gradually increases over the life of the policy. Generally the idea here is to keep pace with inflation or cost of living expenses.


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Term life insurance offers you life coverage for a certain term or period of term, say 5, 10, 15, or 20 years. On a level term policy, premiums remain steady during the term and are usually low cost. Because premiums are cheap and death benefits are high, term policies are more popular.

However, should you survive the term, term policies offer no cash/surrender value. Premiums paid are returned to you, interest free, if you choose an ROP Term Policy. Other options to consider in a term policy are renewability privileges, waiver features, etc.
Term Life is one variation of Life Insurance that is only in force for a certain "term" or length of time. The most common length of time are: 10, 20 or 30 years. Another form of Life Insurance is called Permanent Life Insurance which will last you the rest of your life as long as you pay the premiums, but is generally much more expensive.

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Prudential Life Insurance offers several different type of life insurance, including term life insurance. They offer complete term insurance or supplemental term insurance that can be added on top of any other insurance you may have.

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No, term life insurance has a term, hence the name.

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A term life insurance is during the insurer's life only. When he or she is gone, then the insurance ends. The whole life insurance on the other hand has what the term life insurance covers plus more.

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Life insurance is a more general concept that may refer to either whole life insurance or term life insurance. Whole life insurance gathers value the longer you have it, whereas Term life insurance does not obtain any value that you may use before you die. Term life insurance only pays out when you die.

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Term life insurance will protect the policyholder should his or her life end unexpectedly. Term life insurance is often the cheapest of all available insurance. Usually, term life insurance can be converted to whole life insurance during the term. Whole life insurance will never expire and the rates will remain constant throughout the policyholder's life.


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