George, who is thirty years old, wants to safeguard his family in the event of his untimely death. He pays $50 per month for a 10-year, $500,000 term life insurance policy.
The policy will pay his beneficiary $500,000 if George dies within the 10-year period.
His beneficiary will not receive any benefits if he dies after the policy has expired.
The premiums will be based on his current age of 40 rather than 30, so if he lives long enough to renew the policy after ten years, it will cost more than the original one.
It is likely that George will not be eligible to renew the policy at the end of the first term if he is diagnosed with a terminal illness.
Guaranteed re-insurability (without proof of insurability) is a feature of some policies, but it comes at a higher cost.
Kinds of Term Life coverage
There are a few kinds of term life coverage.
Your particular circumstances will determine which option is best for you. Most businesses offer terms of 10 to 30 years, with a few offering 35- and 40-year terms.
