What Is Term Life Insurance?
Term Life Insurance is a type of life insurance that provides you with initial low cost protection in comparison to Permanent Life Insurance.
It can be purchased as:
1. An annual renewable term:
a. You are covered for one year
2. A set time period of coverage (10, 15, 20 or 30 years) :
a. When the time period expires, the policy switches to an annual renewable term, if you wish to continue with coverage.
b. Some Term contracts can convert to Whole Life Insurance, where you will be covered for your entire life.
How much does it cost?
Term Insurance costs very little for a young adult, but the cost to purchase a policy becomes increasingly higher as you age.
For an annual renewable term:
a. premiums increase every year at an exponential rate, making this the most expensive type of life insurance over time.
For a set time period (10, 15, 20 or 30 years)
a. Premiums stay the same for the set time period
b. When the time period expires, policy switches to an annual renewable term with high premiums. (Note: if these high premiums are not paid, coverage will end.)
