Term life insurance provides life insurance coverage for a term of between 1 and 30 years. Term life insurance is typically renewable and pays a set amount. Get the unbiased facts on term insurance to shop smart and avoid the pitfalls that can lead to non-payment by the insurer.
What is Term Life Insurance?
Typically term life insurance is a renewable policy that provides coverage for a set period of time, as opposed whole life coverage which expires at either the end of life or a certain age.
- Although term insurance is renewable, rates may raise as rates are typically set by: benefit, age, and health status.
- Unlike other life insurance types, term life insurance typically pays a set amount and doesn’t involve an investment fund. In other words, Term doesn’t provide Cash Value.
- Since there is no investment fund for term life policies, they tend to be cheaper than whole life policies.
- Term life is a smart buy for those trying to protect their loved ones in “transition times” (like when paying off a mortgage or preparing to pay for your children’s college education).
- Often, to a smart investor, pairing term life and other investments can be a better deal than taking out a whole life policy (where the insurer typically manages your investments for you, for a fee).
- Be aware: if you forget to pay your premium, you could lose your entire policy. Unlike other insurance types, losing a term policy means never collecting ANY benefits.
Should I get Term Life Insurance?
Term life insurance is smart for specific shoppers. Typically, the younger and healthier you are, the cheaper the premium will be. As such, it can be a smart buy for young families who want to protect their children and the family’s investments.