Term life insurance is a straightforward form of protection. The policy holder insures his or her life for a specified term, which is usually a relatively short period of time. The beneficiaries only receive the tax-free, lump sum payout if the policy holder dies before the specified term is up, otherwise they receive nothing.
Term insurance premiums are typically low as both the insurer and the policy owner agree that during the term of coverage, the death of the insured is unlikely: At the end of the term, there is no maturity value therefore there is no penalty for not renewing a term life policy.
Although a non-renewable term policy would be cheaper, if health problems materialize, your premiums may increase, or you may no longer qualify for a renewed term. However, with a renewable term policy, although more expensive, you will be able to renew the same policy without having to qualify.
Naturally, the older you become, the price of the term insurance will increase, for the simple reason that the older you are, the likelier it is that the insurance company will have to pay out.
The three principal considerations of term insurance are the face amount (the size of the sum to be paid out in the event of death), the premium that the policy holder has to pay, and the term i.e. the length of the coverage.
Unlike in the past, term insurance will pay out even if the policy holder commits suicide, provided this is two years or more after the policy is taken out, and it is not done to benefit from the policy. If the insured commits suicide within the first two years of holding the policy, the beneficiary will receive the total amount of the premiums paid.
It is worth noting that a term insurance policy may also be convertible, meaning you can convert the policy to permanent life at a later time.
*All information displayed in this table is subject to change. Please consult individual insurers for terms and conditions.
