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How Does Term Life Insurance Work?

Term life insurance is typically the most affordable way to purchase financial protection for your loved ones for a specific period of time. Learn more about how this type of life insurance policy works.

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What Is Covered By Term Life Insurance?

Term life insurance is a type of life insurance that provides coverage for a predetermined length of time, or “term.” The term, death benefit and payout details can vary depending on the type of term life insurance plan you choose. Terms typically range from five to 30 years, and you usually pay a monthly premium for the duration of the term.

Depending on the type of term insurance you choose, your premium rates may fluctuate. If you die during the policy term, the policy pays out the predetermined sum of money (or death benefit) to your named beneficiary(ies) as long as you continued to pay your premiums on time.

How Does a Term Life Insurance Payout Work?

Life insurance benefits are typically paid when the insured person dies and the beneficiary files a claim with the insurance company and provides a certified copy of the death certificate.

Insurers review the claim and can then either pay it, deny it or ask for additional information.

What Happens If You Outlive Your Term Life Insurance Policy?

If the insured person is still alive at the end of the policy term, the coverage expires and typically no portion of the premiums are returned to the policyholder. Certain types of term life insurance policies have renewability or convertibility features that allow you to either renew your policy for a specified term without having to undergo another medical exam or convert your term policy to a permanent or cash-value policy.

Other types offer a return of premium, which gives you back the amount paid in premiums if you outlive the policy term.

Learn more about your term life insurance options by speaking with a licensed agent today at 800-966-7169.

*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.

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