Term insurance is a type of life insurance policy that provides coverage for a specified term or
period of time. It is designed to provide financial protection to your loved ones in the event of your death
during the policy term. If you pass away during the term of the policy, the insurance company pays out a
death benefit to your beneficiaries.
Here are a few key features of term insurance:
1. Coverage duration: Term insurance provides coverage for a specific period, typically ranging from 5 to
30 years. You can choose the term based on your needs and financial goals.
2. Affordable premiums: Term insurance generally offers lower premiums compared to other types of life
insurance, such as whole life or universal life insurance. This affordability makes it an attractive option
for individuals or families on a budget.
3. Death benefit: The death benefit is the amount of money that the insurance company pays to your
beneficiaries if you pass away during the policy term. It is usually paid out as a lump sum and can be
used to cover funeral expenses, outstanding debts, mortgage payments, or any other financial
obligations.
4. No cash value or savings component: Unlike permanent life insurance policies, term insurance does
not accumulate cash value or have a savings component. It is solely focused on providing a death
benefit.
5. Convertibility: Some term insurance policies offer the option to convert to a permanent life insurance
policy without the need for a medical exam. This can be beneficial if your needs change over time and
you want to extend your coverage beyond the initial term.
It’s important to note that term insurance only provides coverage for a specific period, and if you outlive
the policy term, the coverage will expire. Therefore, it’s essential to carefully consider your insurance
needs and choose a term that aligns with your financial goals and obligations.