What is Term Life Insurance?

Term life insurance is one of two basic types of life insurance coverage.

Term life and permanent life insurance are the two most common types of life insurance.

Permanent life insurance is lifetime protection and may build up some cash value over time inside the life insurance policy, from which the insured may be able to take out a loan. You pay back the loan amount over time with interest.

Permanent life insurance stays In Force throughout your entire lifetime, as long as you pay your premiums.

Term life insurance is short-term coverage for a specific period of time. It provides temporary life insurance usually for 1-30 years, or until you reach age 65 or 70.

Term life comes in several different forms, including level term, decreasing term, return of premium, and no exam term life insurance.

With a term life policy, you choose coverage for a term (length of time) and you pay premiums monthly, quarterly, semi-annually, or on an annual basis.

If you outlive the term of your term life plan, your life insurance coverage ends.

You may have a choice at that time to purchase another life insurance policy, if you are healthy, and qualify for coverage. Your rate for a new life insurance policy will be higher at that time, based on your age and health.

Level term life insurance is a type of term policy that usually lasts for 10, 15, 20, 25 or 30 years of coverage. Your amount of life insurance stays the same each year, and your premiums remain the same as well.

Level term life is the most popular type of life insurance plan and offers affordable protection for up to 30 years.

Decreasing term life insurance provides a death benefit amount that declines each year throughout your policy, while the premium you pay remains the same. This type of plan may be an option for a debt that you have which decreases over time, such as, a mortgage or car loan.

Return of premium term life insurance offers level term protection and the rate you pay is higher than for level term insurance, because if you outlive the policy term, you get back most of the premiums you have paid into the policy.

Term life insurance with no examination required means you may qualify for a term life policy without having to take a physical exam, blood or urine tests. There are some health questions you answer when applying for a policy. Your answers will determine whether or not you are accepted and approved for a no exam term life policy.

Usually, the amount of life insurance available without a medical exam being required is limited to around $100,000 or less. However, some insurance companies may offer up to $300,000 of simplified life insurance without any health exam.

The rate you pay for no exam life insurance is usually at least 10% (or more) higher than you might pay for a life insurance policy that does require you to tale an examination.

Many young families with children, homeowners, and newlyweds choose to purchase term life insurance because it offers the most life insurance at the lowest price for a period of up to 30 years.