What is term life insurance?

Term life insurance offers protection for a certain period of time. This period is called a term. The term can be one year, or five to 30 years or more. You choose the duration of the term. Term life insurance policies pay your beneficiaries a lump sum, called death benefit, if you die during the term of the policy. The policy ends at the end of the term, unless you pay to extend it.

Term policies are not made to provide coverage for your entire life. Most people who buy term life insurance policies want coverage for only a while, such as when they are starting a family or when they have children in college.

Insurance premiums will remain the same throughout the term. They will increase if you renew them at the end of the term. This is because your new insurance premium will be based on your age when you renew, not how old you were when you originally purchased the policy. To help avoid higher insurance premiums in the future, consider buying a policy with a longer term.

Most companies offer term life insurance only up to a certain age, usually up to 70 or 80 years.

Characteristics of term life insurance
The two most common characteristics of most term life insurance policies are the ability to convert and renew. These make it easier to get a different type of policy or keep the one you have.

The conversion capacity allows you to change the term policy for a permanent life insurance policy without having to do a medical examination or answer questions about your health. This can be useful if your health gets worse after you buy a term policy.

Converting a policy will increase your insurance premium. Companies usually only allow you to convert term life insurance policies for a period of time, usually until you turn 65.

The ability to renew allows you to extend your policy to obtain additional terms, regardless of your health and without having to go through a medical examination.

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