Term Life Insurance Explained

by Ben Bontekoe

Overview

Life insurance allows you to provide for your family if you die, allowing them to pay bills and meet expenses without your income. Among the many types of life insurance, term life is one of the simplest.
Significance

In the event of your death, term life insurance pays the amount of the policy to your beneficiaries. This money can be used to meet expenses or provide child care.

Function

With term life insurance, you pay a set monthly premium over a certain number of years for life insurance coverage. At the end of the term, the policy is canceled.
Benefits

Term life is generally the cheapest form of life insurance. If you plan to only need life insurance for a specific period, you can purchase coverage for just that term.
Considerations

Your term insurance premium will vary according to your age, general health and use of tobacco. You will usually have to take a medical exam before receiving coverage.
Warning

If you require life insurance after your policy expires, you will have to purchase another policy. Your rates will likely be much higher due to age and possibly declining health.