Quick facts about term life insurance

• It’s a simple contract

• There is no cash value

• It’s subject to a physical examination

• Coverage lasts a pre-determined number of years

• It has a fixed annual premium

• There is a fixed death benefit

• It can not be extended without a new physical examination
   

An example of term life insurance

You might choose a 10 year, 20, 25 or 30 year level term policy with coverage ranging from a low of $100,000 up to $1M. The annual premium would be the same amount each and every year, with the cost based on your average age over the term of the policy. There are preferred, standard and sub-standard rates, not to mention smoker and non-smoker rates.  All of this is determined a the time of application. If spouses purchase policies at the same time, a discount is typically allowed.  

 

As to what term length makes the most sense, many policyholders pick a term that matches the length of their mortgage or they might choose a term expires when their youngest child will be a young adult and less likely to be dependent on their financial support.