What is Term Life Insurance?

If you search in Google for what is the definition of Term Life Insurance, you will receive the following definition: “Term life insurance or term assurance is life insurance that provides coverage for some sum of money during given period of time.” Google definition is not bad, but let’s explain a bit more.

Value of Term Life Insurance

Term Life Insurance is cheap, and the only way you can can any money from it is if you die. Not a very happy outlook, is it? It is one of the reasons why people put off obtaining policies as long as they can. A term policy can be set for any term as agreed. It has a high value to price ration and is used as an insurance policy for mortgages and loans. Another use of this type of policy is to cover an immediate need and secure “insurability”. By taking out a Term policy, you secure your insurability and later you may want to convert it into a Whole Life policy and you will not have to undergo a medical exam.

Various Term Life policies

Let’s briefly name the different types of policies, which we will discuss in greater detail in separate articles here. The most basic Term policy is one called the LEVEL TERM. It is broken down into two other types: ANNUAL RENEWABLE TERMS and LEVEL PREMIUM TERM. The first one retains a level face amount, but premiums increase with age. The later retains the same premiums throughout its lifetime, but the premiums are higher than in the first case.

Another type of Term policy is called CONVERTIBLE TERM. It allows the insured to convert it into a permanent policy without medical exam.

Other types of Term Life Insurances are: RENEWABLE TERM, DECREASING TERM, INCREASING TERM and INDETERMINATE PREMIUM. Each of them has its own target group and purpose. Which one is best for you, if any, is better to be discussed in person. Give us a call and let’s talk.

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