How does term life insurance work?

Term life insurance is an easy-to-understand type of life insurance.

Term life provides you with temporary life insurance that lasts for a specific number of years. Most term life policies are issued for a period of 10, 15, 20, or 30 years.

There is no cash value that builds up within the policy. You pay for, and receive, life insurance protection, that's all.

Term life insurance provides life insurance protection for the term of the policy, and when that term expires, the policy ends.

If you outlive the term of your life insurance policy, the policy expires and there is no more coverage.

If you die during the term of your policy, your beneficiary would receive the proceeds from your term life insurance policy. Usually, proceeds are paid out free from federal income tax.

When you consider buying a term life insurance policy, make sure you ask about the conversion option, which let's you convert your term life insurance policy to a permanent life insurance policy.

Also, ask about renewability of your policy. This means you can renew your term life insurance policy without having to take a medical exam to qualify for coverage.

Learn more about How Term Life Insurance Works.