Life Insurance Basics
What Is Term Life Insurance?
Term life insurance covers you for a set period like 10, 20, or 30 years, pays only if you die during the term, and builds no cash value.
Transcript
So what is term life insurance? Term life insurance is a type of life insurance that covers you for a specific period of time such as 10, 20, or 30 years. If you pass away during that term it pays a lump sum death benefit to your beneficiaries to help replace income, pay a mortgage, or cover other expenses. Now it does not build cash value and if you outlive the term the coverage typically ends unless you renew or convert it to some kind of permanent policy, usually at a much higher cost. Because it is temporary and has no savings component, term life is generally more affordable than permanent policies for the same death benefit amount.
Three takeaways. One, term life covers you for a set period, not for life. Two, pays a lump sum death benefit only if you die during the term. Three, generally is a lower cost than permanent life but grows no cash value.
If you want to check out related glossary links you can look at whole life insurance, death benefit, term length, and policy renewal and conversion. Thanks for watching.
More quick answers
What Is Whole Life Insurance?
Whole life insurance is permanent coverage with a guaranteed death benefit, level premiums, and cash value you can use while you are alive.
WatchHow Does Life Insurance Actually Work?
You pay premiums, the insurer contractually owes your beneficiaries a death benefit, and some policies add cash value and living benefits you can use before death.
WatchWhat Is Cash Value Life Insurance?
Cash value life insurance is permanent coverage with a built-in savings component that grows tax-deferred and can be borrowed against during your lifetime.
WatchWhat Determines How Fast Cash Value Grows?
Cash value growth comes down to how aggressively you fund the policy, how efficiently it is designed, and the crediting method behind it.
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