Term Life Insurance

Term life insurance is the least expensive and least complicated type of life insurance available. It provides insurance protection at a low cost for a specified period of time such as 5, 10, or 20 years. The premiums are guaranteed to remain level depending on the term that you have chosen. If you die within the specific term period, the death benefit that was purchased is paid to your beneficiary. If you are still living at the end of the term, you have the option of renewing the term at a higher premium rate based on your current age, or convert the policy to a whole life or universal life policy. No medical evidence is usually required at each renewal period.

Term insurance is designed for people with a temporary need for life insurance protection, and those who need a large amount of insurance protection but have limited budgets. It is also designed for individuals with specific business needs, such as business owners who want to cover the life of a key employee who has a set number of years until retirement.

Term insurance will provide protection for a low cost, and if your needs change, most policies will allow you to convert your term policy to a permanent life insurance policy without having to provide any medical evidence. Term insurance is a good way to supplement other coverage whey you have added financial responsibilities for a specific period of time, such as a mortgage, or college expenses for your children. Another advantage of term insurance is that the proceeds to the beneficiary are received free from income tax.

One of the drawbacks to consider is that the premiums at each renewal period will almost triple (as they are based on your current age) and could become unaffordable in the later years. Term insurance polices do not have cash values such as whole life or universal life policies. Once the term period has expired, the insurance coverage ceases and the policy is no longer in effect.