Term Life Insurance Explained
Term life insurance provides coverage for a specified period of time - the term of the policy. This term typically ranges from 5-30 years. After the term, you may renew your policy with a premium adjusted for your health and age. Your policy is paid out only upon death within duration of the term. Term life insurance is the lowest priced insurance on the market. It allows you to save substantially on life insurance and invest the savings in a higher yielding investment.
Term policies are designed to meet a specific need for a specific period of time. The most common type today is level term, which has a level death benefit and a level premium for a specified number of years. These are commonly used to provide protection for families until children reach an age where they are independent and can provide for themselves. It is also useful as an affordable starting point - you can convert it to a universal or whole life policy at a later date.
Another type of term life insurance, decreasing term, is generally sold with a level premium and a decreasing death benefit. One common use of decreasing term is mortgage life insurance - designed to decrease at the same rate your mortgage balance decreases. These types of policies are often offered as riders in connection with whole and universal life policies, with the whole or universal life policy providing the "backbone" of your overall protection plan. An insurance professional can help you find the best combination for your current and future needs.