Term Life Insurance
As the name implies, this is life insurance for a term, or a set number of years. Most term policies offer a level premium guaranteed for 10/15/20/25 or 30 years. At the end of the term the policy either ends or the premium jumps so high that virtually every policyholder lets the policy lapse. Think of term life insurance as similar to automobile insurance. It covers you in case of an unexpected collision (premature death). If you don’t have a collision (you don’t die during the term period) no benefit is paid out.
Term life insurance will almost always give one the most death benefit for the lowest cost. It is best suited for temporary life insurance needs such as:
- Family protection while children are young and dependent
- Covering a mortgage or other debt
- Funding a business buy/sell agreement
- The cost of replacing a key employee