| life insurance for which premiums are paid over a limited time and that covers a specific term, the face value payable only if death occurs within that term. |
| Main Entry: | term life insurance |
| Part of Speech: | n |
| Definition: | a type of insurance where the insurance company pays a specified amount if the insured person dies while covered but there is borrowing power, benefits at retirement, or cash value; also called [term insurance] |
Term Life Insurance
A policy with a set duration limit on the coverage period. Once the policy is expired, it is up to the policy owner to decide whether to renew the term life insurance policy or to let the coverage terminate. This type of insurance policy contrasts with permanent life insurance, whose duration extends until the policy owner reaches 100 years of age (i.e. death).
Investopedia Commentary
These type of policies provide a stated benefit upon death of the policy owner, provided that the death occurs within a specific time period. However, the policy does not provide any returns beyond the stated benefit, unlike permanent life insurance policies, which have a savings component that can be used for wealth accumulation.
Related Links
Buying Life Insurance: Term Versus Permanent
Taking The Surprise Out Of Long-Term Care
See also: Death Benefit, Life Insurance, Permanent Life Insurance, Universal Life Insurance, Whole Life Insurance