Benefits of Term Life Insurance

Term life insurance provides life insurance for a specific period of time, or “term”. Term life insurance provides only “pure” insurance protection and does not have the savings feature typically found in most permanent "cash-value" life insurance policies.

This type of insurance offers the users a choice of terms from 1 year renewable up to 30 year terms. The renewable options are usually only available for the shorter terms, 1 to 5 years. The premium for the term remains the same throughout the term, the most popular nowadays is the 20 year term. In certain cases you can also opt for a term to a specified age, usually 65.

Term life insurance is most useful when an insured person is relatively young and the need is for temporary or short-term coverage. Young, growing families with limited income and a high insurance need represent one situation where term life insurance works very well. Situations where a need will decline over time, such as with a home mortgage, are also good candidates for term life insurance.

The younger you are when you take out a term policy, the cheaper the premiums. Because the premiums will not increase over the term, the longer the term the more money you save. Thus a young person can have a very high insurance death benefit for a relatively small premium up to the age of 65.

Another benefit may be “Return of Premium” as some insurers have created term life with a “return of premium” feature. The premiums for the insurance with this feature are often significantly higher than for policies without it, and they generally require that you keep the policy in force to its term or else you forfeit the return of premium benefit.