Term Life Insurance

Term Life Insurance

A policy with a set duration limit on the coverage period. Once the policy is expired, it is up to the policy owner to decide whether to renew the term life insurance policy or to let the coverage terminate. This type of insurance policy contrasts with permanent life insurance, whose duration extends until the policy owner reaches 100 years of age (i.e. death).

Notes:

These type of policies provide a stated benefit upon death of the policy owner, provided that the death occurs within a specific time period. However, the policy does not provide any returns beyond the stated benefit, unlike permanent life insurance policies, which have a savings component that can be used for wealth accumulation.

See also: Death Benefit, Life Insurance, Permanent Life Insurance, Universal Life Insurance, Whole Life Insurance

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Term life insurance

A contract that provides a death benefit but no cash build up or investment component. The premium remains constant only for a specified term of years, and the policy is usually renewable at the end of each term.