Temporary insurance, more frequently known as term, has two main features: the amount of the death benefit and the price of the policy.
In other words, Term insurance is a life insurance contract that provides protection for a limited number of years. The contract is quite simple: When you die, the insurance company pays. The death benefit is only payable if death occurs during the agreed-upon term.
Level Term Life Insurance is often used for family protection purposes by providing life insurance cover in the event of the death of the life or lives assured for the benefit of the surviving spouse and, if there are any, the dependant children.
Term insurance gets its name from the fact that it covers you for a specific term, or period of time.
The amount of Level Term Life Insurance remains level for a specific term i.e 25 years and is arranged normally on a sole life or joint life first death basis with the premium often remaining constant throughout the term.
If the life assured outlives the term then the Level Term Life Insurance policy normally finishes and the life policy pays out nothing. This is one of the reasons for why Level Term Life Insurance is normally cheaper than say a Whole of Life policy.
Level Term Life Insurance is also used to cover personal and business liabilities such as overdrafts.
Term life insurance policy is a form of protection for a specific period of time. It can be 5, 10, 15 or 20 years. The insurance policy expires at the end of the term period with no accrued cash and there are no payable benefits.
If the policy owner dies during the term period then only the death benefit is payable. Some people define a term life insurance policy as "insurance that is actuarially designed to expire before you do".
There are many types of term insurance policies. Let us look at the need and which policy to apply to that need.
