FAQ Insurance

What is Term Life Insurance

Term Life Insurance

We’re all familiar with insuring our belongings, whether its a house, a car, our personal effects, and of course most people in the western world will also have some type of policy to cover retirement, a government subsidized pension, or investments, but a significantly smaller number of people have term life insurance, or to more correctly describe it, as death insurance.

Of course we know that when we are dead we aren’t going to be terribly worried about making a claim on our insurance, the ancient Egyptians aside, most sane people recognize life insurance is intended to protect our estate and dependents from hardship after we are no longer alive to support them.

Term life insurance is one of several options we have available to us, and tends to be the most affordable as well. It can be compared with permanent life insurance, and other forms of life insurance such as variable, universal, or whole life insurance policies.

I mentioned that life insurance could more correctly be called death insurance, and in the case of term life insurance this is most definitely correct. A policy is taken out for a fixed number of years, and for an agreed value, and if the premium is paid every year then the policy remains in force with the original terms.

Essentially, term life insurance is very simple; an individual takes out a policy and agrees to pay a fixed amount per year, for a fixed number of years, and if they should die before the policy expires, their estate will receive the insured amount. If the policy expires before their death then the policy will need to renegotiated or a new policy found. Read more »