What is a term life policy?

Term life insurance is a type of life insurance that provides coverage for a specific period, or term, chosen by the policyholder. It’s typically the most straightforward and affordable life insurance option by covering you for a set "term" (life insurance terms are typically 10 to 30 years). If you pass away during the term period, your beneficiaries receive a cash payment, called a death benefit.

Unlike permanent life insurance policies, such as whole life or universal life, term life insurance does not build cash value over time. 

Is a term life insurance policy good for me?

Term life insurance is a straightforward and cost-effective solution for individuals seeking affordable protection during specific periods of their lives. It's important for individuals to carefully consider their financial goals and needs when choosing the duration and amount of coverage that best suits their circumstances.

That said, there are a few reasons that many people choose to get a term life policy. First, it’s generally more affordable than permanent life insurance, especially in the early years of coverage. This makes it an attractive option for individuals who want significant coverage at a lower cost, particularly during times of higher financial responsibility.

The other key advantage is that premiums for term life insurance policies are fixed for the duration of the term. This means that the policyholder pays the same premium amount each year, providing predictability for budgeting purposes.

What’s the difference between term and whole life insurance?

If you’re considering life insurance, term policies use premiums to cover you for the determined "term" of the policy, expiring if not claimed within that time frame. Whole life insurance can last your entire life if premiums remain current. Whole life policies also have the potential to accrue cash value, depending on the policy. Still, premiums typically cost between five and 15 times more than a term life insurance policy for the same benefit amount. 

A term life policy may provide a good match for someone seeking affordable coverage to replace lost income over a critical period, such as while raising children or paying off a mortgage. Whole life insurance offers options for those with more complex financial situations or someone desiring the security of lifetime coverage.