Definition Of Term Life Insurance And Then Some...

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What is a good definition of term life insurance? How would we describe it? What does it do? Why do people buy term life insurance ? Here is a good definition of term life insurance...

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Term life insurance is the type of insurance which pays the face amount of the policy applied for upon the death of the insured. This amount can be paid in lump sum form or in income form. How payment is made depends, more often than not, on the choice of the insured. On occasion the decision is left up to the beneficiary. There is much more to the definition of term life insurance.

A term life policy can be issued at any age but many life insurance companies do not sell it to persons beyond age 65. There are usually no cash values attached to this policy, however, in recent years insurance companies have created what is called a return of premium term life insurance policy. If you should live beyond the specified term period you get back all you have paid. The introduction of this policy has changed the definition of term life insurance somewhat.

There are some people who believe that term life insurance is the only type of insurance that they should buy. Term insurance is inexpensive insurance but there are many types. Following is a brief definition of term life insurance policies.

• Decreasing Term Life Insurance

  The face amount of this policy decreases every year. The premiums stay level.

• Annual Renewable Term Life Insurance

  Annual renewable term is sometimes referred to as increasing premium term or yearly renewable term. This is a one year term policy which you have the option of renewing each year without any additional evidence of insurability.

• 5 Year Term Life Insurance

  This policy has a guaranteed level death benefit for 5 years. During the 5 year period you have the option of converting to permanent life insurance without evidence of whether or not you can qualify. Whole life insurance , universal life insurance , variable life insurance and endowment insurance are all permanent life insurance policies.

• 10 Year Term Life Insurance

  This policy maintains a level death benefit for 10 years. It can be converted to permanent life insurance at any time during it's in force period.

• 15 Year Term Life Insurance

  The 15 year term life policy also has a level death benefit but this time for 15 years. You have the right to convert it to permanent life insurance.

• 20 Year Term Life Insurance

  Most of the better companies maintain a guaranteed level death benefit for 20 years and also a level premium. It also has the conversion privilege built in.

• 30 Year Term Life Insurance

  It also has a guaranteed level death benefit. The policy can be kept for 30 years and can be converted during its life.

The premiums of the 5 year, 10 year, 15 year, 20 year and 30 year term policies are all level premiums. Now that you have this definition of term life insurance it should be easier to make a decision as to which to buy. I hope I have been of some help.

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