Term Life Insurance
Term life insurance provides death benefit protection for a specific period (term), with no cash value accumulation, offering the lowest premium for the highest coverage.
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Exam Tip
Term = temporary protection, no cash value, lowest cost. Pure insurance only.
What is Term Life Insurance?
Term life insurance provides pure death benefit protection for a specified period—typically 10, 20, or 30 years. If you die during the term, beneficiaries receive the death benefit. If you outlive the term, coverage ends with no payout.
Key Characteristics
| Feature | Description |
|---|---|
| Coverage Period | Fixed term (10, 20, 30 years) |
| Cash Value | None |
| Premiums | Lowest of all life insurance types |
| Death Benefit | Paid only if death occurs during term |
Types of Term Life
- Level Term - Premium and death benefit stay the same
- Decreasing Term - Death benefit decreases over time (often for mortgages)
- Annual Renewable Term (ART) - Renews yearly with increasing premiums
- Convertible Term - Can convert to permanent insurance
Term vs. Permanent Life
| Feature | Term | Permanent |
|---|---|---|
| Cost | Lower | Higher |
| Duration | Temporary | Lifetime |
| Cash Value | No | Yes |
| Best For | Temporary needs | Lifetime needs + savings |
When to Buy Term
- Mortgage protection
- Income replacement during working years
- Children's education funding
- Maximum coverage on a budget
Study This Term In
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Whole Life Insurance
Whole life insurance is a permanent life insurance policy that provides lifetime coverage with fixed premiums, a guaranteed death benefit, and cash value that grows at a guaranteed rate.
Death Benefit
A death benefit is the amount of money paid to beneficiaries upon the death of an insured person, typically the face amount of a life insurance policy.
Premium (Insurance)
An insurance premium is the amount paid by the policyholder to the insurance company for coverage, typically paid monthly, quarterly, or annually.
Beneficiary
A beneficiary is a person or entity designated to receive the death benefit or proceeds from an insurance policy or retirement account.
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