If you are shopping for a life insurance policy for a specific period of time, and need temporary coverage lasting for 30 years or less, you may want to consider term life insurance coverage.
But, what does term life cover?
That’s a good question. You certainly want to find out what type of death would be covered by a term policy before making a purchase of life insurance.
We will explain to you How term life works, How long it lasts, Your option for term life policies, and What is covered by a term insurance plan.
What Does Term Life Insurance Cover?
Term insurance plans cover death resulting from a number of different causes.
Common Causes of Death Covered by Term Life Insurance
The natural death or caused by health-related issues is covered by term life insurance plans.
In case the insurance person dies due to any type of medical condition or illness, the beneficiary of the insurance policy will receive the death benefit.
Features of Term Life Insurance Coverage
Level Term
The annual insurance premium you pay for your term life insurance policy stays the same each year. It will not increase during the policy term.
The face amount of life insurance coverage also stays the same. The amount of insurance does not decrease over time. Level term life policies can usually last up to 30 years.
Convertible Coverage
Before the end of your policy term, the life insurance policy owner (you) may be able to convert the term insurance policy into a permanent life insurance policy.
The owner usually has a specific number of years during the term policy to convert the coverage to permanent insurance.
Your insurance premiums will be higher for the permanent insurance policy.
Renewable Coverage
Term life insurance policies that are renewable offer the owner of the term policy the option of renewing the insurance policy at the end of the policy term, up to a specific age limit, usually age 65 or 70.
For example, a 10-year policy may be renewed for another 10 years when the first policy ends.
If the term life policy is renewed, a medical examination may or may not be required.
The life insurance premium will usually increase when the policy is renewed.
How Term Life Insurance Works
Term life insurance provides you with temporary life insurance for a specific number of years. You can choose coverage for a "Policy Term" of 10, 15, 20, 25 or 30 years.
Term insurance builds no cash value inside the policy over time, it is not an investment, it is "Pure Protection", providing only a Death Benefit, no Investment Feature.
That’s why term policies usually cost 5 to 10 times less than the same amount of permanent life insurance.
Term life is the lowest cost type of life insurance available for 30 years or less.
Term life lasts for a set period of time, up to 30 years.
Term life policies pay the beneficiary the face amount of the life insurance policy, if the insured person dies during the duration of the insurance policy.
For example, a 15-year term life policy with a face amount of $200,000 would pay $200,000 to your beneficiary, if you die any time during those 15 years.
If you're alive at the end of your policy term, the coverage ends.
How Long Does a Term Insurance Policy Last?
You may be able to choose a Policy Term of 10, 15, 20, 25, or 30 years of coverage.
Types of Term Life Insurance Policies
Level Term
Level term insurance is the most popular type of term policy available.
Level term has premiums that never increases and coverage that never decreases during the life (policy term) of your life insurance policy.
Decreasing Term
Decreasing term has premiums that stay the same each year, while the amount of life insurance provided by your policy decreases each year.
Annual Renewable Term
An annual renewable life insurance policy provides one year term coverage. If you choose to continue your life insurance at the end of the one year policy term, you may renew your policy for an additional year, at a higher premium.
This means, each year your premium will increase, making your insurance coverage unaffordable should you need your life insurance renewed for several years.
Term Life Insurance Quotes
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