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WHAT IS TERM LIFE INSURANCE?
Term life insurance is considered a temporary insurance because it expires after a certain age or after a certain time frame. Which means the amount of the face value is payable if you die during that specified period. You can purchase term life insurance from 1-year to 30-year period (some restrictions apply due to your age.) Term insurance premiums tend to be low because of the fact that most term policies do not cover the period of old age when death is most likely to occur where the pure cost of insurance is high. In fact, according tot he statistics, only (about) 3% of the term insurance policies are paid where most of them expire without people needing them enforced.
Term life insurance is life insurance for a fixed duration, which in theory could be for a period of one year but is usually for terms extending from 10 to 30 years.
When you consider term life insurance, a useful feature to watch out for in the policy is guaranteed re-insurability which will negate the possibility of becoming uninsurable should there be a change in your circumstances.
You can also opt for level term life insurance, where the amount of premium is predetermined to be the same for a certain number of years. This kind of term life insurance may not be cost effective when you consider a longer term or duration of the term of insurance. Typically the later years of life carry a higher risk and therefore are calculated for higher premium payments. When those later years are factored in and a mean premium is calculated, your current premium can be quite high if the term is for several decades.
