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Term Life Insurance

Main Features

  • Term life insurance covers the insured person for a limited period of time, usually a set number of years. The most common terms are 1, 5, 10 or 20 years. The term can also be until the insured person reaches a certain age (e.g., 60 or 65 years).
  • The insured sum is only payable should the insured person die while the policy is in effect.
  • As a general rule, term life insurance coverage can be renewed at the end of each term without proof of insurability.
  • At the time of renewal, premiums are increased according to the age of the insured person.
  • A term life insurance policy can generally be converted into a whole life policy at any time before the insured person’s 65th birthday without proof of insurability.
  • A number of add-on coverage options may be offered with term life policies:
    • Disability insurance
    • Accidental death or dismemberment coverage
    • Accidental fracture coverage
    • Coverage for the insured person’s spouse or children
    • Guaranteed insurability
    • A premium waiver in the event of disability
  • Term life insurance is sold alone or in combination with other life and health insurance products.

Major Advantages

  • Since it is generally less expensive than whole life, term life is the most popular form of life insurance.
  • This type of coverage is used for specific temporary or short-term needs. It is a good choice for someone just entering the workforce who does not have a lot of money available for insurance, or for people who anticipate their insurance needs will diminish over time. For example, term life insurance can be useful for someone who has dependents or any type of shorter term responsibility, such as a personal loan.
  • Benefits paid out upon death are nontaxable.

Warning: The above text is of a general nature and is intended for explanatory purpose only. Each of the products described above has its own specific features. Moreover, only the product contracts contain the complete terms and conditions as well as restrictions and exclusions to which they are subject.