Here’s what to know about Term Life Insurance

Term life insurance is an affordable, temporary form of life insurance that guarantees your beneficiaries receive a payout if you pass away while the policy is active.

• What is Term Life Insurance?

  

  Term life insurance is a temporary life insurance policy that covers you for a certain amount of time - usually between 10 and 30 years. When the policy expires, you can renew the policy for another term, switch to permanent coverage, or allow coverage to terminate. The holder does not get their money back once the term expires.

  There are a few types of term life insurance policies: Level Term, Yearly Renewable Term, and Decreasing Term.

  A Level Term policy has a fixed death benefit and premium for the duration of the policy. A Yearly Renewable Term does not have a set term - it’s renewed annually and premiums change each time. A Decreasing Term Policy has a fixed premium, but the death benefit gets smaller each year.

• How Does Term Life Insurance Work?

  Term life insurance is pretty straightforward. You purchase life insurance coverage for a set period of time. If you pass away before the term expires, your beneficiaries receive a death payment.

  Term Life Insurance policies - often decreasing term policies - may also be necessary to qualify for a mortgage in the event you pass away before paying for your property.

  

• Who is Term Life Insurance for?

  

  Term life insurance is for people who want life insurance for a guaranteed period of time.

  People with young children may opt for a term life insurance policy to protect their kids if they unexpectedly pass away while their children are still financially dependent on their parents.

  Term life insurance can also supplement your permanent life insurance policy.

• How Much Does Term Life Insurance Cost?

  Term life insurance premiums will be based on your age, gender, and health status. The length of your policy and benefit amount will also impact the cost. That means the premium your neighbor pays for his term life insurance policy will probably be different than yours, even if you both have the same insurance provider.

  Term life insurance is typically the most affordable type of life insurance, especially when you’re younger.

  Compiled data for a $500,000 life insurance policy for a 20-year term show that an average 25-year-old male pays $26.67 per month and a female pays $20.81 per month. At age 50, a man pays $93.23 per month and a woman pays $71.03, on average.

  

  25 Years Old

  $500,000 Policy
  20-year term

  $26.67 per month

  

  25 Years Old

  $500,000 Policy
  20-year term

  $20.81 per month

  

  50 Years Old

  $500,000 Policy
  20-year term

  $93.23 per month

  

  50 Years Old

  $500,000 Policy
  20-year term

  $71.03 per month

• Term Life Insurance vs. Whole Life Insurance

  Term Life Insurance and Whole Life Insurance are the two most common types of life insurance policies.

  Whole life insurance offers lifelong coverage and grows in value over time.

  Term life insurance offers lower premiums than whole life insurance, and term life insurance may offer larger payouts to your beneficiaries upon your death. However, a term life insurance policy does not have a savings component that allows you to grow the value over time.

  Sources

  https://www.policygenius.com/life-insurance/life-insurance-cost/ https://www.investopedia.com/terms/t/termlife.asp