What is Term Insurance?

Term life insurance provides coverage for a limited period of time. After that period is over, the policy can be dropped or continued. Term insurance is considered the least expensive compared to other insurance policies. Term life is considered temporary because it does not have cash value, only a death benefit. If the policyholder stops paying premiums, the policy lapses and no benefits will be paid.

Families who have young children especially need life insurance. If both the spouses work, loss of any one income can cause economic hardship. If only one spouse is working, and he/she dies, the financial hardship can be devastating.

If a person is single, with no children, he/she will need insurance with limits to cover funeral expenses and outstanding debts so as not to burden other family members if death were to occur.

Different types of term insurance are decreasing term, increasing premium term life, ten-year level term life and five-year level term life. The benefit of decreasing term is that if the insured dies unexpectedly then this policy will pay off his mortgage. Another benefit is that low premium has to be paid, which makes it an affordable policy for the buyer. Five year level term life means that the face value and its premiums are the same and upon the death of the insured within this period, the beneficiary will receive the proceeds paid by the life insurance company in one lump sum. In ten-year level term life the face value and its premium are the same and the death benefit is ten years, the buyer can renew the policy upon maturity but with higher premium. In 20-year term life, the premium amount is the lowest, but it does not have any cash value. The buyer will not get anything at the time of maturity of the policy