Term Life Insurance
Contents
What is term life insurance?
Who should get term life insurance?
What’s next?
Variations on term life insurance
What is term life insurance?
Term life insurance is the cheapest, simplest form of life insurance. It distinguishes itself from permanent life insurance in that the policy only lasts for a predetermined period of time (the term).
How it works is extremely simple: The insurance company pledges to pay a certain sum (death benefit) if you expire during the period agreed upon in your contract. You, in turn, make periodic payments (premiums) to keep the contract in force. In a traditional term life insurance policy, the death benefit and the premiums are fixed at the time your contract is made and do not change.
At the end of your policy’s term, your payments and your coverage both cease. However, you may have the opportunity to renew your term policy.
Who should get term life insurance?
Term life insurance is commonly purchased for the following reasons:
- Cover debts / liabilities (e.g. home mortgage, funeral costs).
- Maintain a spouse's standard of living.
- Provide for one’s children until they are of age.
- Pay for schooling or daycare for one’s children.
- Fund a buy-sell agreement for a business.
- Protect a business from a key employee's death.
If you have young children, debts and liabilities, own a business, or want to leave behind a legacy, then term life insurance may be right for you.
What’s next?
You have several options at this point:
- Begin shopping for term life insurance now, using our quoter to instantly compare term life insurance rates online. (click here)
- Get shopping assistance by visiting our online Life Insurance Information Library or by calling 1-800-823-4852 to speak with an advisor. (click here)
- Compare what you’ve learned about term life insurance with whole life insurance and universal life insurance.
- Continue to the section below to learn about several variations on basic term life insurance.
Variations on term life insurance
The term life insurance policy you create may fall into zero or more of the following classes:
- Return of premium life insurance (ROP)—When the term ends, your premiums are all refunded to you.
- Annual renewable term life insurance (ART)—The term is just one year long, but you get to renew your policy upon its termination.
- Renewable term life insurance—You can renew your term life insurance policy when it expires.
- Adjustable term life insurance—The death benefit is adjustable during the term of coverage.
- Universal term life insurance—Term life insurance with a cash value component.
- Participating life insurance—Term life insurance which provides dividends to the policyholder.
