What is Term Life Insurance?

Term life insurance is the most basic form of life insurance available. Term insurance provides coverage for a set period of time, such as 10 years (T10) or 20 years (T20). At the end of each term, the policy holder has the option of renewing for another term. Premiums typically increase at the time of renewal.

Because it is relatively inexpensive you can get much more coverage with term insurance than you could with whole life or universal life insurance, which makes it ideal for young families.

Traditionally, term insurance expires at the age of 65 or 75. But many life insurance companies now offer term insurance with expiry ages of 80 or 100.

Term life insurance carries no "cash value", like whole life or universal life insurance. This means that once the policy expires, the policy holder does not receive a cash refund. But should the insured die during the policy lifetime, the death benefit--the amount of money received by the beneficiaries--is completely tax free.

Buying personal term insurance policy is a better alternative to accepting the bank's offer for mortgage life insurance. Find out why!