Term Life Insurance

What is Term Life Insurance?

Term life insurance coverage is just what it sounds like: life insurance for a specified policy term. The coverage is in effect for a term of years that you choose up front, usually ranging from 10-30 years. If you die while the policy is in force, the insurance company pays death benefits to your named beneficiaries.

Why Do I Need Term Life Insurance?

The number one reason for purchasing term life insurance is to provide protection to your loved ones. If you were to die prematurely, would your loved ones be able to maintain their standard of living? Term life insurance can provide a cash death benefit that could be used to pay your final expenses, including the expense of a funeral service, a remaining mortgage balance, children's education expenses, or paying ongoing expenses after your death.

How Does Term Life Insurance Work?

Like other types of life insurance, term life insurance starts with an application for coverage with an insurance company. Once a policy is in force with the company, you pay monthly, quarterly or annual policy premiums to maintain coverage. If you die during the specified policy term, the insurance company pays the specified death benefit amount to your named beneficiaries.

What are the advantages of Term Life Insurance?

One of the biggest advantages of term life insurance is its affordability. Insurance companies can offer lower premium rates for term insurance coverage than for permanent policies because the odds of death during the policy term favor the insurance company. Term life insurance policies are also a great way to maintain flexibility: you can adjust the policy according to your changing needs. If you realize more permanent coverage is a better option for you, most in-force term life insurance policies can be converted to permanent life insurance.

Other advantages of term life insurance:

It can be used to supplement life insurance coverage provided by your employer
Policies provide a fixed death benefit for a time period that you choose up-front
In addition to the specified "face amount" death benefit, your policy may include a return of premium option
Some policies also offer other coverage options called riders, which include critical illness and disability insurance protection

Do I Qualify?

When you apply for any type of life insurance, you need to answer some basic questions about your health and lifestyle. Most people who are generally healthy will qualify for coverage. If you have some existing health problems you can still qualify, however the premiums may be higher.

For some policies, you do not need to submit evidence of insurability beyond the application questionnaire, meaning you shouldn't need a physical examination to qualify for coverage.

Is Term Life Insurance Affordable?

Because it is intended to provide coverage only for a specific amount of time and not your whole life, term life insurance is generally the least expensive type of life insurance you can buy. Your specific premium will be based on your age and overall health at the time the application is taken. Non-smokers in good health will typically pay lower premiums.

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