How does term life insurance work?
Term life is the most basic type of life insurance. Coverage is purchased for a specific amount of time, or the "term," which is typically 10, 20, or 30 years. Think of it as temporary insurance.
If you die within the term of the policy, your beneficiary will receive the value of the policy. And your death benefits are usually free of income tax.
If you are still living when the policy expires, coverage ends and nothing is paid.
Term life insurance, unlike permanent life insurance, does not provide cash value. Since premiums do not contribute to cash value, a term life policy is usually more affordable.
Who should consider term life insurance?
Term life insurance may be appropriate if you need
- Maximum coverage with a minimal budget. Term life insurance is less expensive to establish, since it does not provide cash value, and the risk is concentrated within a specific time period.
- Coverage for a specific obligation. Term life insurance can be used to cover the time period of a specific debt. For example, if you need to guarantee repayment of student loans, you could purchase a 10-year term policy just after graduation.
- Additional coverage for a limited amount of time. Term life insurance can be used as a supplement to a permanent life insurance policy. For example, an insured might have a permanent life policy worth enough to pay the living expenses of survivors. The insured could purchase a term life policy to cover the cost of the mortgage.
- Future insurability. Term life insurance can be used to ensure someone will be able to buy permanent insurance at a later date. Most term policies can be converted to a permanent life insurance policy without proof of good health (and within certain guidelines).
What types of term life insurance are available?
EZ Term Life™ Insurance
- For younger people with limited budgets
- $50,000 coverage until age 40
- Premiums remain the same throughout the life of policy
- Convert to a permanent policy any time before age 40, without proof of good health
10-, 20-, and 30-Year Term Life Insurance
- An affordable life insurance option for many young families
- A guaranteed death benefit of $100,000 or more
- 10-, 20-, and 30-year term options
Yearly Renewable Term Life Insurance
- Designed for people who need large amounts of low-cost life insurance
- Automatically renew your policy each year until age 851
- Convert to a permanent policy without proof of good health2
Express Term Life Insurance
- Available in $50,000, $75,000 or $100,000 amounts
- No physical exam or test required (no blood drawn and no urine specimen)
- Premiums remain the same for 30 years or to age 65, whichever comes earlier
- No conversion option
Term life insurance is typically less expensive to purchase, although the older you are, the more expensive your premiums will be. And the policy may not be renewable after a certain age.
If you are looking for a solution that protects and your family for a period of time, consider term life insurance.
1 Your premiums are based on your age, gender and rate class.
2 Up to the policy anniversary date following the insured's 71st birthday.
The product information contained on this website is informational only and not a statement of contract. All coverage options are subject to the provisions of the policy purchased and details of the policyholder's situation.
Shelter Life Insurance Company, 1817 West Broadway, Columbia, MO 65218