Term Life Insurance

Term life insurance is a form of life insurance that spans a fixed number of years, such as the next year, the next five years, or the next thirty years. You buy a specific amount of coverage, and pay for that coverage for an exact “fixed term,” which is established when you buy the policy. The amount you pay (the premium) remains the same over the full term, whether it is 5, 10, or even 30 years.

As long as you pay your premiums, your beneficiaries receive a tax-free payout from the policy in the event of your death. Unlike [whole life insurance], the policy does not accumulate additional funds.

This type of insurance can be a good option in many different situations. For instance, if you have young children, term insurance can provide peace of mind for your surviving spouse. In this situation, it offers transparent, basic financial protection to replace your income and support your children. If your insurance is not required during the fixed term, such as when your children are older, you can opt to switch from term life insurance to a permanent life insurance policy.

Term life insurance can also make you feel more secure when taking out large loans. You can set it up to cover the loans you may take when you purchase a home, start a business, or take on large student debt, to avoid passing that financial burden onto your family.

There is no right insurance for everyone, and your needs may change over the years. Before purchasing, consider the pros and cons of term life insurance: