Term Life Insurance

What Is Term Life Insurance?

Term life insurance is a type of life insurance that provides coverage for a specific period of time, known as the policy term. If the insured person dies during that term, the insurance company pays a death benefit to the designated beneficiaries.

Term life insurance is often considered the simplest and most affordable form of life insurance.

Why It Matters

Term life insurance helps provide financial protection for families or dependents during important life stages such as raising children, paying a mortgage, or supporting household income.

Because it focuses on pure insurance protection without an investment component, term life insurance typically offers higher coverage amounts for lower premiums compared to permanent life insurance policies.

How Term Life Insurance Works

Policyholders choose a coverage term, commonly 10, 20, or 30 years. They pay regular premiums to keep the policy active.

If the insured person dies during the policy term:

the insurer pays the death benefit to beneficiaries
beneficiaries may use the funds for living expenses, debts, or financial needs

If the term expires and the insured is still alive, coverage ends unless the policy is renewed or converted.

Example

A parent may purchase a 20-year term life insurance policy to ensure their children are financially protected until adulthood.