What Is Term Life Insurance? by Ralph Ramah

Term life insurance is the least expensive type of coverage and least complicated type of life insurance, at least initially. Coverage is in effect for a fixed term or period of time, typically 1 to 30 years and usually, can be renewed.
The policy pays your beneficiary a fixed amount of money if you die during the term of the policy. The premiums are lowest when you are young and generally increase upon renewal as you age. These policies do not build up a cash value. Term life insurance provides life insurance protection for a specified period of time. If you die within the term period and the policy is in force, a death benefit is paid to your beneficiary. If you are still living at the end of the term, protection ceases unless the policy is renewed. There is no "accumulation" element, or cash value with term life insurance.
Term life insurance is mainly for: * People with a temporary need for life insurance protection. * Those who need a large amount of life insurance protection but have limited budgets. * People with specific business needs (e.g., business owners who want to cover the life of a key employee who has a set number of years until retirement).
The following are the benefits of Term life insurance that should be considered: * Term life insurance provides insurance protection for a low cost (at least initially). * If your needs change, most term policies allow you to convert to a permanent life insurance policy without having to take a medical exam or provide other information about your health. * Term life insurance is a good way to supplement other coverage when you have added financial responsibilities for a given period of time (e.g., mortgage, college expenses). * Death benefits are generally received free from income tax
There are certain things which every individual should consider while taking the Term life insurance: * Premiums generally increase with age and they could become unaffordable later in life. There is no cash-value element, so you miss the tax-deferred growth of the cash value of permanent life insurance policies, such as Whole Life Insurance. * Once the term period expires, you should renew your policy as it is possible.