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Term Life Insurance
Term life insurance is a type of insurance policy that provides a death benefit to you if you die within a specific, predetermined period or "term". Unlike Whole Life Insurance or Transitional Life Insurance, it doesn't accumulate cash value and is purely for protection during a temporary financial need, such as a mortgage or supporting children until they are independent. Policies can range from 10 to 30 years, offering affordable coverage for a set duration, with the premiums and payout typically remaining level for the policy's life.
How it works
Coverage term
You choose a specific period, such as 10, 20, or 30 years, for which you want coverage.
Death benefit
If the insured person dies while the policy is active and within the term, the beneficiaries receive a tax-free lump sum or installment payments.
Expiration
Once the term ends, the coverage expires, and no benefit is paid unless the policy is renewed or converted.
Key characteristics
- Temporary protection – It's designed for specific periods when financial obligations are highest, such as while raising a family or paying off a mortgage.
- No cash value – Unlike whole life policies, term life insurance doesn't build a cash value that can be borrowed against or withdrawn.
- Affordable;– It's generally the most affordable type of life insurance for a given amount of coverage.
- Simplicity – It's straightforward, offering protection without complex investment components.