What Is Term Life Insurance?
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Term life insurance is a life insurance product that is bought for a specified number of years. It provides level coverage with level premiums for a term, or period of years, that can range from one year up to 30 years.
At the end of that term, the insured has a choice to either renew the life insurance for another term, or to switch to a whole life policy. Since life insurance is based on age, the insured will most likely be paying considerably higher premiums when the policy is renewed. A health test may also need to be given at that time.
Term life insurance has no cash value associated with it, it is just plain insurance. It is much cheaper to buy than a whole life policy of equal face value.
This is a great way to get low cost life insurance. J.D. Power suggests that you buy when young to get the best deal. Be sure to get several term life quotes before choosing a life insurance company.
For savings, you will get much more interest in another form of investment – other than a whole life policy. You can use an IRA or 401(k) to put your savings into and get tax deductions on the money, too.
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