Term Life Insurance

Temporary life insurance protection for a specified period of time, or term. The death benefit is paid only if the insured dies during the contract period and all premium has been paid in a timely fashion. 

Term plans do not develop any cash surrender value, therefore they do not have any contractual nonforfeiture values like those found in whole life insurance. The purchaser is exchanging premium dollars ONLY for death benefit coverage and policy expense, nothing else. 

Term is low-cost life insurance when compared with WL because in a term policy, the owner is not paying extra for a cash-value-building element, and it is a temporary policy. The cost of coverage per thousand dollars of insurance is quite low for young purchasers but can become very costly for older insureds. 

However, it is common that cost increases during the contract as the insured grows older simply because the risk of death increases with each passing year of life. 

1) Types of Term Insurance – The types of term insurance are defined by how the death benefit behaves over the coverage of the contract and does not refer to the premium cost. Three term varieties are: 

l LEVEL – Death benefit/face amount stays the same over the term time. 

l DECREASING – Death benefit/face amount reduces to zero over the term time. 

l INCREASING – Death benefit/face amount increases over the term time, then ends.