What Is Term Life Insurance?

Once you have determined that you need life insurance, and calculated how much coverage you require, you will have to choose between several types of life insurance policies. Generally, there are two very different types of life insurance contracts -- term and permanent.
What is Life Insurance Laddering? 
Term Insurance Overview

Term life insurance is often referred to as "pure insurance" because it involves only the payment of a premium in exchange for a promise to pay a death benefit in the event of your death while the contract is still in force.
Term life insurance provides protection for a specified maximum period of time and is usually renewable at the end of each period at progressively higher premiums. As you get older, your risk of dying increases, so the cost of term insurance goes up. Term insurance carries no cash value element, making it initially less expensive than permanent alternatives.
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​Annual Renewable Term

Annually renewable term (sometimes called Yearly renewable term, YRT, ART) is an example of a term insurance policy which has a constant face value and premiums that are adjusted upwards each year to reflect the increasing probability of your death in any given year.

Level Term Life Insurance

If you prefer, you may select a "level term" policy which guarantees you a level premium for a number of years and a level death benefit for the same period. Usually for a: 
  • 5 Year Level Term
  • 10 Year Level Term
  • 15 Year Level Term
  • 20 Year Level Term
  • 25 Year Level Term
  • 30 Year Level Term
  • Now 35 Year Level Term
The longer the guaranteed term, the greater the initial premium, but the longer the premium stays fixed. In most cases, if you know you will need your term insurance for a long period of time, a level term policy will prove less costly than an annual renewable term policy.

What Is Permanent Life Insurane?