Term Life Insurance
Term life insurance is the simplest and least expensive form of Life Insurance. It provides coverage at a fixed rate of payments for a limited time – the term. Term insurance functions in a manner similar to most other types of insurance in that it satisfies claims against what is insured, in this case, death, if the premiums are paid up to date and the policy has not expired, and does not provide for a return of premium if no claims are filed. You choose the term of the policy which normally ranges between 5 and 40 years depending on the purpose of the policy.
The most common form of Term Life Insurance is a Decreasing Term Plan, which is required by your bank should you take out a loan. In this case, the coverage amount decreases every year in line with the amount due to the bank.
Another form of Term Life Insurance is a Level Term plan. In this case the coverage amount remains constant throughout the term of the policy. The most common uses for this type of policy are pure income replacement and estate planning.