Coverage Period

Term insurance provides coverage for a specific period, such as 10, 20, or 30 years. If the insured person dies during the term, the insurance company pays the death benefit to the designated beneficiaries.

Death Benefit

The primary purpose of term insurance is to provide a death benefit to beneficiaries if the insured person passes away during the policy term. This benefit is usually paid out as a lump sum and is income tax-free for the beneficiaries.

Premiums

Premiums for term insurance are typically lower compared to permanent life insurance because they cover a specific period and do not accumulate cash value. Premiums can be level (remain the same throughout the term) or increasing (may increase over time).

Renewability and Convertibility

Many term insurance policies offer the option to renew the coverage at the end of the term without requiring a medical exam, although premiums may increase based on age and health. Additionally, some term policies can be converted to permanent life insurance policies during a specified period without additional underwriting.

Tax Benefits

The death benefit from a term insurance policy is usually paid out income tax-free to beneficiaries, providing a tax-efficient way to transfer wealth.

Affordability and Flexibility:

Provides financial protection and peace of mind by ensuring that loved ones are financially secure if the insured person passes away during the term.

Helps cover immediate financial needs such as paying off debts, maintaining lifestyle expenses, funding education for children, or replacing lost income.