Term Life Insurance Explained

Life insurance is a contract binding a life insurance company to compensate a beneficiary for the death of a person insured. If the insured dies the company will provide a cash payment to the beneficiary. Life insurance is used to protect the economic value of a human life with regards to those who may be financially dependent upon it.

Term life insurance provides a low cost way to get maximum insurance protection for a set period of time at a fixed cost. A term life insurance policy covers the insured for a specified period of five, 10, 20 and now even 30 years. The premium rate you pay for term life insurance is guaranteed to remain the same low amount for the duration of the term of coverage selected.

Consider These Advantages for Term Life Insurance

• Term life insurance premiums are generally lower than those for permanent insurance.

• Term life insurance is ideal for covering specific needs that will disappear in time, such as mortgages or family income needs for children.

• Term life insurance can serve as mortgage protection for your family due to premature death of the insured.

• Term life insurance offers higher coverage more affordably when the need for protection often is greatest.

• Term insurance is an effective way to get the most coverage at the lowest cost for up to 30 years.

Understand the Terms of Term Life Insurance

• Term life insurance policies build no cash value.

• A term life insurance benefit is paid only if you die during the term of the policy coverage. If death occurs, the beneficiary collects the face amount (death benefit) of the policy income-tax free.

• Premium rates for renewals of term life insurance policies will normally increase at the end of the guaranteed policy period. Term life insurance policies require that you furnish evidence of insurability at renewal to qualify for these rates.

• Should your life insurance needs change, many term life insurance policies carry a conversion privilege that will allow you to convert your term life insurance coverage to permanent Universal Life or a Whole Life Policy without a medical examination. It is important to check the conversion privileges of the term life insurance policy before you make your purchase.