What is term life insurance?

Term life insurance provides for the payment of the sum assured only if the life assured dies within a specified period. If the life assured does not die, the policy ceases and the premiums paid are retained by the insurance company.

Thus, the premiums paid contain no savings element. As such, term life insurance provides the maximum protection on the life assured for a specified number of years for the minimum amount of premium.Term insurance is regarded as temporary insurance (as opposed to permanent insurance like whole life), and as such, it does not provide any surrender values, paid-up values, loan values or any of the non-forfeiture privileges.

This relatively inexpensive form of insurance cover is useful for the following purposes:

  • To provide insurance coverage for a short period of time
  • To cover a loan or debts such as credit cards
  • To cover the needs of a family (household expenses) in the event of premature death OR total & permanent disability due to accident or illness
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Comments
2 Responses to “What is term life insurance?”
  1. Kyra says:

    There are also options available for return of premium, or R.O.P. policies. These are strictly term. For a little bit more, all of the premiums you paid in through the life of the policy are refunded back to you when the term expires.

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