Term life insurance is, as the name implies, only in force for a predetermined length of time. It guarantees a death benefit only during a specified term, for example 5 years, 7 years or 10 years.
Once the term expires, the policyholder can either renew it for another term, convert it into permanent coverage, or allow the policy to cease. Term life insurance is often used for:
- Mortgage Protection
- Income Preservation
- Key Man Insurance
- Short-term Purposes
The benefit over whole life is that Term Life is temporarily lower in cost, but upon renewal a new higher premium tends to negate this benefit so always choose Whole Life Insurance or Index Universal Life (IUL) if you are fortunate enough to qualify. Term is customarily preferable only for limited timeframes.