Guide · Term life · 2 min read
What is term life insurance?
Term life insurance covers you for a set number of years. If you die during that time, the policy pays a death benefit to the people you named.
How the level period works
Term policies are sold for a fixed length, such as 10, 20 or 30 years. During that level period the premium usually stays the same. Your contract states the length of the term and the death benefit amount.
What happens when the term ends
Some policies simply stop. Others renew year to year at a higher premium. Many include a conversion option, which lets you switch to a permanent policy without a new health exam. Conversion usually has a deadline, so check the dates in your contract. Our guide on a term policy that is ending covers the choices in more detail.
No cash value
Term life is usually protection only. It generally does not build cash value. If you outlive the term, the policy usually pays nothing and has no value to borrow against.
Who it often fits
People often look at term life when they need a larger amount of coverage for a limited time, such as while children are young or a mortgage is being paid down. Whether it fits depends on your goals, your health and your budget.
What to ask your insurer
- How long is the level premium period, and what is the death benefit?
- What will the premium be after the level period ends?
- Can the policy be renewed, and can it be converted? Until what date?
- Does the application need a medical exam, or only health questions?
- Which riders are available, and what does each one add to the cost?
This guide gives general information and is not advice on your own policy. Your policy contract and the insurer make the final call.