Term life insurance, as its name suggests, is basically a sort of life insurance policy. At its simplest level, it promises your payment will be fixed at a set rate for a set period of time. This is known as the “term.” After this “term,” though, your payments are likely to change leaving you with no choice other than to meet them or to stop with that policy.
It is a life insurance policy – in that it does not pay out for injury or accident not resulting in death. It only pays out if you die. It will pay the money out to the person you named as the beneficiary in almost all cases, unless, of course, there are reasonable grounds on which to dispute it.
There are certain circumstances in which term life insurance policies will not pay out even if the holder does indeed die, as there are with most insurance policies. An example would be if the premium payments were not up to date at the time of death or if there were any breaches of the policies terms. With most life insurance policies, there is also a clause that will deny payment if the death was a result of suicide.
Term life insurance policies are really useful though for people who fear that, if they were to die, they would leave a lot of expenses behind. These expenses could be the cost of raising any children they may have, mortgages, outstanding debts and also the funeral expenses.
Term life insurance will often work out less expensive than a permanent life insurance policy and can often be used as a “bridge,” for those who are worried about leaving those expenses for their families. For example, someone approaching retirement who believes that, once they retire, they will have amassed enough money to cover said expenses in the event of their death, may use term life insurance just until they reach that point.
Find out more about term life insurance.