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Long Term Life Insurance Defined

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The definition of a long-term life insurance policy depends on which context the word “term” is used in. In the insurance context, the word “term” has a special meaning. Thus, a long term life insurance policy can refer to term life coverage that has a long period in which the insurance is in effect. However, if long term is used as an expression to mean providing long lasting insurance, it can apply either to a whole life or term life policy.

What is Long Term Life Insurance?

In life insurance vernacular, term life insurance refers to a policy that protects you only for a stated period of time (the “term”). For example, a term life insurance policy may be sold for anywhere between a one year term and a thirty year term. The “term” is the period in which the death benefit is paid if you die.

For example, if you have a thirty year term policy, your death benefit is paid if you die any time within the thirty years after purchasing the policy. If you die after 31 years, your term life insurance policy is no longer in effect (unless you renewed) and your beneficiaries do not receive a death benefit.

Therefore, a “term” life insurance policy can theoretically provide long term (i.e. long lasting) life insurance protection for your family, but only if you buy a thirty year term policy and you consider thirty years to be a long period of time.

Whole Life Insurance

Whole life insurance, unlike term life insurance, does not stop providing a death benefit after a set period of time. Instead, whole life insurance will pay a death benefit no matter when you die, as long as you keep your policy current by continuing to pay premiums. Premiums for whole life insurance tend to be higher than premiums for term life insurance (in some cases as much as several thousand dollars per year higher) but your family is provided with financial protection no matter when you die.

Because whole life insurance is a form of permanent protection, if “long term” life insurance is defined as providing protection for your family over the longest possible period of time, whole life insurance is in fact the best time of long term life insurance. This does not make it term insurance. It simply means it is the best long term life insurance solution as it provides permanent protection instead of protection for a limited number of years.

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