Term insurance is a type of life insurance that provides coverage for a specific period, or “term.” It is typically less expensive than permanent life insurance, which provides coverage for the policyholder’s entire lifetime.
Term insurance is designed to provide financial protection to the policyholder’s loved ones in the event of their death during the policy term. If the policyholder dies during the policy’s term, the insurance company pays a death benefit to the designated beneficiaries. If the policyholder does not die during the policy’s term, the coverage may continue, but the premiums will change.
There are several types of term insurance, including:
- Level-term insurance: This provides a fixed death benefit and premium for the entire term of the policy.
- Increasing term insurance: This provides a death benefit that increases over time, typically at a set rate. The premium also increases over time.
- Decreasing term insurance: This provides a death benefit that decreases over time, typically at a set rate. The premium remains fixed.
Term insurance is a good choice for individuals who need temporary coverage to protect their loved ones during a specific period, such as while raising children or paying off a mortgage. It is typically less expensive than permanent life insurance, but it does not provide the same level of long-term financial protection. It’s important for individuals to carefully consider their insurance needs and choose a policy that meets their needs and budget. A reputable insurance broker or agent can help individuals determine the coverage they need and find a policy that meets their needs and budget.