What is Term Life Insurance?

• Term life insurance is a form of insurance policy that has a pre-determined time limit and offers only a death benefit. There are three basic forms of term life insurance; renewable, level and diminishing. Renewable term life insurance renews every year over a certain time period. As you get older, your premiums generally go up with renewable term insurance. Level term insurance means that the premiums remain the same for the entire term of the agreement. Diminishing term insurance has coverage levels and premiums that decrease over time. This kind of insurance is commonly used as mortgage protection insurance where the insurance coverage drops along with the principal left to be paid on the mortgage.
  
  

Does a Term Life Insurance Policy Gain in Value?

• No. A whole life policy increases in its monetary value because there is an investment portion of the policy that you pay into each month. As your investments gain in value, so does your policy. But a term life insurance policy does not increase in value over time.
  
  

What Happens If I Live Past My Term of Coverage?

• Some term life insurance policies offer a clause called a continuance. That means that you can convert your term policy into a whole life policy when the term is up. This tends to be more expensive than your standard term insurance. If you do not have a continuance on your term life policy, then all of your coverage will run out when the policy term is up, and your beneficiaries will receive no death benefit.
  
  

Which Costs More Term or Whole Life Insurance?

• According to the finance experts at the SmartMoney website, a term life policy is significantly less expensive than a whole life policy. The open-ended term of a whole life policy, and the additional cost of the investment part of the policy, make whole life more expensive than term.
  
  

Why Buy Term Life Insurance?

• A term life insurance policy can be an inexpensive way to protect your family against costs that may end or diminish over time. For example, you can protect your family if you should die before your mortgage is paid off or before your children graduate from college. When the coverage is no longer needed, you can drop it and stop paying premiums.
  
  

Do I Need a Medical Exam for Term Life?

• Many term life insurance providers require a medical exam before approving a policy, but some do not. You will have to search around and talk to different insurance companies to find ones that do not require a medical examination to be approved for insurance. Some medical conditions will also increase the cost of your policy.