Term life insurance is designed for individuals with a temporary need for coverage. It pays a benefit only if you die while the policy is in force , and it offers the most initial protections for the least amount of premium. Over time, permanent insurance is more cost-effective.
There are basically 2 kinds of term life insurance policies:
- Level term – Provides a level death benefit for a specified period of years [ usually 5,10,15 and 20 years], at a guaranteed level premium.
- Annually renewed Term – Provides a level death benefit for a specified period of years Premiums increase every year.
For specified period of time, most term policies can be converted to permanent insurance regardless of your insurability.