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Term Life Insurance

What Is Term Life Insurance?

Term life insurance provides coverage  for a certain time period. It’s often called “pure life insurance”  because it’s designed only to protect your dependents in case you die  prematurely. If you have a term policy and die within the term, your  beneficiaries receive the payout. The policy has no other value.


You choose the term when you buy the  policy. Common terms are 10, 20 or 30 years. With most policies, the  payout, called the death benefit, and the cost, or premium, stay the  same throughout the term.


When you shop for term life:

  • Choose a term that coincides with the years you’ll be paying the bills and want life insurance coverage in case you die early.
  • Buy an  amount your family would need if you were no longer there to provide for  them. The payout could replace your income and help your family pay for  services you perform now, such as child care.

Ideally, your family’s need for life insurance will end around the time the term expires: Your kids will be on their  own, you’ll have paid off your house, and you’ll have plenty of money in  savings to serve as a financial safety net.


Who Will Benefits From Term Life Insurance?


Term life insurance is attractive for young couples with children. Parents may obtain large amounts of coverage for reasonably low costs. Upon the death of a parent, the significant benefit can replace lost  income. They are also well-suited for people who temporarily need  specific amounts of life insurance. In these cases, the policyholder believes their survivors will no longer need extra financial protection, or they will have accumulated enough liquid assets to self-insure. 


What Happens At The End Of My Term?


Term life insurance doesn't always "expire" at  the end of the term period. What does expire, however, is the low rate  you've been paying. The term period is set when you purchase the policy  and typically lasts for 10, 15, 20, 25 or 30 years. After that, you can  usually continue the policy on a year-to-year basis to age 95, but at a  much higher cost. 


 

What Do I Do If My Policy Terms?


Well, that depends on your life insurance needs. Even though your term period has expired, your policy may still have  value to you. If you find that you still need life insurance protection  at this point, you do have options for extending, converting or renewing  the coverage. 


Depending on your situation your needs for a term life insurance policy may have changed. If you are fifty years or older you may consider converting your term life insurance policy to a whole life/final expense policy.






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