For individuals looking for a pure death benefit to cover financial responsibilities taken on by loved ones after death, term life insurance provides support for a limited period. For this reason, term life insurance is considered relevant only when an income replacement strategy is needed to support your loved ones. While this life insurance policy type provides many of the same benefits as the others, it does not provide a return on premiums or a cash value if no claims are filed throughout the policy period.
Term life insurance is designed to provide coverage for a limited period of time, known as the relevant term, at a fixed rate of payments. Once this relevant term expires, policyholders are required to potentially obtain more coverage or completely forgo coverage because the existing policy is no longer guaranteed. In most cases, term life insurance periods vary between 10 to 30 years or, occasionally, when the policyholder reaches age 95. The most common version of term life insurance functions on an annual renewable term in which the premium provides annual coverage for a specified period of time.
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