Term life insurance or term assurance is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. If the life insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is typically the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time.
Term life insurance as noted above is for a limited period of time. Typically these policies will last 10, 20, or 30 years. You might have a friend or you have heard of a friends kids getting a term life insurance policy to cover the mortgage. The term life policy will be the most cost affective for most people. There is an exam and blood work that is required by most companies to get the best possible rate.
Once the term life policy has reached the maturity period and the term is coming to an end the client will have three options. They can continue to make the premium (keep in mind that the monthly premium will be quite higher because they base the premium based on your age at that time, not when you took the policy), they can lower the death benefit to keep the premium lower or close to what they were paying prior to the term policy coming to an end, or they can drop the policy. Some companies will offer the option to the client to convert their term policy into a universal life, a whole life product of some short, or into another term in efforts to keep the client.
While the Term Life insurance is important and affordable knowing that there is a limited time attached to the policy can scare some people. Remember you have the term for a reason which is typically to cover some type of debt whether it is for a house, small business, or a vehicle. Once the term is up or you reach the time where the item the policy is intended to cover has been reached you might want to consider a different policy. Statically speaking 2% of Term Life insurance policies pay out, meaning that client either out live the policy or once the term is up the rates go up so high that the client will drop the policy.