How Term Life Insurance Works

Get everything you need to know about term life insurance here. We’ll explain what it is, how it works, and what its benefits are.

Term Life Explained

When you get term life insurance quotes, you are requesting protection for a limited amount of time, usually 10, 15, 20, or 30 years.  If the insured person dies while the policy is in force, a death benefit is paid to the beneficiaries.  If you are still alive when the term period expires, your protection ceases and the policy has no further value.  For your insurance protection to continue once the policy expires, you must renew the policy for an increased premium.  Remember when you submit an application for term life insurance quotes that term life policies do not accumulate cash value.  Some term life policies allow you to convert the policy to a permanent life policy at the option of the policyholder without evidence of insurability.  In other words, you can switch to a lifetime of protection without having to submit evidence of your health status.

How It Works

Term life insurance is the least complicated and most affordable type of life insurance.  How it works is fairly simple.  You take out a policy with a specified term and death benefit.  For example, you might take out a 15-year policy for $1,000,000.  If you die during the 15 years the policy is in force, your beneficiaries, or the people you named to receive the proceeds of your policy, will be paid a death benefit of $1,000,000.  If you are still alive after 15 years, your protection will cease unless you renew the policy.  As you get term life insurance quotes, keep in mind that term life insurance premiums will increase as you age, so policies can quickly become unaffordable later in life. 

Benefits of Term Life

Here are some of the best reasons to get term life insurance quotes:

• Get a large amount of protection on a limited budget
• Supplement existing coverage with term life when you have additional financial obligations (e.g., mortgages, college tuition, etc.)
• Meet specific business needs.  For instance, you can cover the life of a key employee until he or she retires.
• Beneficiaries do not have to pay income tax on death benefits
• Some term life policies give you a conversion option to switch to a permanent life policy

If you have any questions, please visit our Frequently Asked Questions page.

Things You Need To Know

Things You Need To Know