Reader’s Question:

I heard there are life insurances that can give me coverage for a certain period of time. I’m going to be working in what I see as having a hazardous environment for a short while. Can you give me the term life insurance definition?

Miguelito

San Diego CA

An insurance coverage that will be in effect for a certain period of time. That’s the term life insurance definition. You see, Miguelito, you’re in the right track. You said you’ll temporarily be assigned in a job that you consider as having a risky environment, and thus, you need a life insurance in at least that short duration of time to ensure the financial stability of your family just in case you will die on the job.

By the term life insurance definition itself, this type of insurance is renewable. Although it may be renewed without giving an evidence of good health, premiums on renewed policies are often higher than the previous ones. This is due to the increased risk of death at a higher age.

Further basing on the term life insurance definition, people usually purchase this type of insurance for short-term purposes such as to cover them until their children become adults or until retirement. You should note, however, that you won’t be receiving any benefits from this type of insurance if you don’t make any claims against the policy while it is still in effect.

There is also a so-called return of premium term life insurance in which aside from ensuring death benefits to your benefactors when you die, you will receive the premium amount you had paid when you are still alive at the end of the policy term. In short, whether you die or not, you or your benefactor will be able to reap the benefits of what you have spent into the life insurance.

Term life insurance is considered the simplest and the cheapest among the different types of insurance. However, although its premium cost may be low in younger years, it generally increases substantially with the age of the one being insured. For some, term life insurance is purchased to serve as an insurance cover for a loan repayment or post-death liabilities like estate taxes.