Term life insurance is purchased as a "protection" policy that pays a death benefit to the insured’s designated beneficiary(s) in the event of the policyholder’s death. The policyholder pays a premium over a specified term, and the life insurance company pays the death benefit to the beneficiary upon verification of the policyholder’s death.
The amount of the term life insurance policy’s death benefit is typically an amount that the policyholder has chosen (such as one or two times his/her annual income). The amount of the death benefit can stay the same for the length of the policy or increase according to the policy’s terms.
In addition to providing a death benefit to the policyholder’s beneficiary, term life insurance policies may include accelerated death benefits the insured may access while alive, subject to specific conditions.
For those seeking long term coverage, it is important to keep in mind that a term life policy is not permanent insurance. The policyholder is responsible for renewing the policy after the term has expired if he/she wants to maintain coverage. Additionally, premiums are typically higher for policies that are renewed.
Overall, term life insurance can provide much-needed financial protection for an individual’s family and loved ones in the event of his/her death. It is important to carefully review the terms and conditions of a policy to make sure that it is the best choice for their needs.
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