Term Life Insurance…The Basics


Term life insurance provides a death benefit only. This form of life insurance policy does not build any cash value and there are three basic types: Annual Renewable, Level and Decreasing Term.

Annual Renewable Term

Death benefit remains level. Premium increases annually since, as the covered person ages, there is an increased likelihood of death.

Level Term

Both the policy's death benefit and its premiums remain level for a predefined period of time: usually, five, ten fifteen, or twenty years.

Decreasing Term

The death benefit decreases each year while the policy's yearly premium stays the same. It reflects the fact that a certain level of premium purchases a reduced amount of protection with each passing annual term. This type of policy is often used to cover a mortgage or other loan obligation that has a decreasing balance.

Characteristics Of Term Insurance


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