Term Life Insurance provides coverage for a set number of years—such as 10, 20, or 30—and can pay a pre-determined death benefit. Typically costs less than permanent coverage, but does not build cash value.
Length of Coverage
Specific periods of time: 10, 20 or even 30 years of coverage
Premiums may be level for a certain period of time only based on the individual’s life expectancy and the length of coverage. After the initial period, premiums will gradually increase
Premiums may also be graduated to increase as the cost of insurance rates increase
Premiums will be required at regular intervals during the entire time the life insurance policy is active to keep it in force
No cash value component, no policy loans or policy withdrawals are available to a policy owner
The advantage of term insurance is that it is (initially) inexpensive
Tax-free death benefit
Helps provide for a family’s loss of income, covers short-term debts and needs
The disadvantage of term insurance is that it is often outlived and the premiums eventually become prohibitive since they increase with age.