Term Life Insurance

Term life insurance is life insurance which provides coverage for a limited period of time. After that period, the insured can either discontinue the policy or pay annually increasing premiums to continue the coverage. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is often the most inexpensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis.

Like auto and homeowner's insurance, term insurance only covers you during the time you're making payments. For this reason, it's less expensive than permanent life insurance. There are four different varieties of term insurance:

• Convertible Term Insurance - lets you convert the policy into a permanent one at any time. There's no medical exam, but premiums may go up.
• Term Insurance - lets you sign on for a new term policy without a medical exam, although the premium may be higher.
• Level Term Insurance - lets you pay the same premium every year for the length of the term and be entitled to the same amount of proceeds if you die during the term. If you want to renew it at the end, your premium may rise significantly, since you'll be older.
• Decreasing Term Insurance - pays a death benefit that gradually decreases in value over time. Premiums usually remain the same throughout the term.
• Return of Premium (ROP) - option (that builds up like a small whole life policy). In most cases this option can be added on as a rider on a Life Insurance policy providing that, in the event of the death of the insured within a specified period of time, the policy will pay, in addition to the face amount, an amount equal to the sum of all premiums paid to date.

Many people prefer term life insurance to provide their families with the security they need to cover short term expenses such as college education for children, mortgage payments, and etc. In addition many people find term life insurance to be the least expensive option when they require larger amounts of coverage - typically 100,000 and up.

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