Term Life Insurance

What is it?

Term life insurance provides life insurance coverage for a specific time period (term). It is often referred to as temporary insurance or “pure insurance” since there is no cash value build up or investment component. The death benefit (face amount) of the policy is paid if you die during the term of the policy. When you live longer than the term of the insurance coverage, nothing is paid. You can choose the term, face amount, and beneficiary of the policy.

When is it used?

Life insurance is designed to protect those who have an economic interest in your life. This includes income earners that have dependants or non-working parents who are taking care of children or other family members.

Our recommendation

Our advice is to purchase life insurance if you have dependants or others who depend on you financially and that would incur an economic loss if you were to die.

Rational

If your accumulated assets are not enough to support loved ones after your death, term life insurance is needed to fill the gap.

Where to find it

Many employers offer term life insurance as a payroll deduction. Typically the benefit amount available is 1-6 times your annual compensation. This type of “group” coverage is usually offered without a medical exam. You will want to be sure that your employer offered term coverage is guaranteed renewable and portable. This means that your policy cannot be terminated for as long as you pay the premiums and that if you leave your job, your life insurance can come with you. If your life insurance is not portable, you may end up in a situation where you are out of a job and without life insurance. To prevent this situation, you should find an individual policy instead of using the insurance your employer offers.