What Is Term Life Insurance?

As its name implies, term life insurance protects you for a limited term or time. It resembles insurance on cars and homes. Usually term policies are for five or ten years. If the insured person dies after the term is up, his family gets nothing. Term life insurance is not for the purpose of building cash value for use in future years. It is pure insurance for insurance's sake only. Term insurance provides the maximum protection for the premium dollar.
A "renewable" term policy guarantees a person the right to renew a term policy regardless of his health. But he must pay a higher premium each time he renews. Yet when one is between the ages of twenty-five and forty-five the price of five-year renewable term insurance goes up relatively slowly. However, after one is sixty-five it is usually impossible to buy term insurance.
Over a lifetime, term insurance costs more than permanent life insurance. This is true because permanent insurance builds cash value that is received back. But for shorter periods of time term insurance gives protection at much lower cost.