Term life insurance provides fixed rate coverage for a limited time. After that period expires, the policyholder must either forgo coverage or obtain further coverage with new conditions. But if the policyholder dies during the term, the benefit is paid to the beneficiary. Term insurance is typically the most affordable type of life insurance policy.
Term life insurance is a pure death benefit. It doesn’t accumulate monetary value or gain interest. Term life insurance is generally favored over permanent life insurance because of the expense.
A person might choose a term policy that expires near their retirement age. Believing that by the time they retire, they will have sufficient funds in retirement savings to provide financial security. Term insurance periods are typically 5, 10, 15, 20 and 30 years.