Term insurance is known as the simplest form of life insurance.

Term life insurance covers the person insured for a certain period of time (hence the word “term”) specified in the policy. In other words, term life insurance only pays if you die during the specific period of time or “term” specified in the policy.

That Specified Period or “Term” can Vary.

A term may be anywhere from one to 30 years. According to the term you choose when buying the insurance policy, if you die in that time frame, then the insurance will pay a benefit to the designated beneficiary.

There are two Basic Types of Term Life Insurance Policies—Level Term and Decreasing Term.

• Level term means that the death benefit stays the same throughout the duration of the policy.
• Decreasing term means that the death benefit drops, usually in one-year increments, over the course of the policy’s term.

Even if you don’t die during the specified term – you can renew many term life policies. However, premiums increase with age.

The benefit of a “renewable” term life insurance policy is that it continues in force for an additional term (or terms) up to a certain age. So you will have coverage even if your health goes sour or you have other factors that would have get rejected where you applying for a new life insurance policy.

Common Types of Level Term are:

• yearly- (or annually-) renewable term
• 5-year renewable term
• 10-year term
• 15-year term
• 20-year term
• 25-year term
• 30-year term
• Term to a specified age (usually 65)