Term Life Insurance

What It Is

Term life insurance is a life insurance policy that guarantees your beneficiaries a death benefit if you pass away during the specified term. The term may last for five or 10 years, but after the term is over, you must purchase another policy if you want to continue to have this type of coverage.

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Who It Is for

Term life insurance is a life insurance policy that appeals to young couples with young children. Term life insurance also would benefit you if you only need to make sure that your beneficiaries have a means of support for a short period. For example, you may need to ensure that a family member will receive a sum of money for a five-year term. At the end of the term, this family member would be able to support herself, so a term life insurance policy would fit into your plans.

How It Works

Suppose that you are 30 years old and searching for a term life insurance policy. You purchase a 10-year policy that will pay out $500,000 if you pass away during the term. To keep the policy active, your insurance company will charge you $50 per month. If you survive the term, you will need to renew the policy for another term, or you can purchase permanent life insurance that does not need to be renewed.

Different Types of Coverage in Existence

One type is the level term policy. You can purchase this type of policy with terms of 10, 20 or 30 years. Your premium will be fixed, and the death benefit your beneficiaries will receive will also be fixed.

Another type is the decreasing term policy. The death benefit will decrease each year so that your beneficiary would receive a smaller amount of money each year. People like these policies because they can attach the death benefit to the decreasing amount of their mortgages.

Major Benefits

The major benefit that term life insurance offers you is the fact that it is inexpensive. In contrast, permanent whole life or universal life insurance policies are much more costly.

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1494 N. Vasco Rd. | Livermore, CA 94551