An Introduction to Term Life Insurance Policies

A successful financial executive, Darcy Bergen serves as the founder and president of Bergen Financial Group in Peoria, Arizona. Darcy Bergen draws from over 20 years of experience to offer professional advice on matters related to retirement planning, wealth management, tax planning, income strategies, and estate planning. He also focuses on life insurance. 

Life insurance is a type of contract between a policyholder and an insurer wherein the latter makes regular payments or premiums to the former in exchange for a guaranteed death benefit to designated beneficiaries. One common type of life insurance policy is known as term life insurance.

A term life insurance policy offers pure death benefit protection for a specified term, which is typically 10, 20, or 30 years. Insurers are allowed to renew their policy annually until the age of 95. Insurers don’t receive a return on what they paid for the insurance at the end of the term. If the insurers die before the term is over, the beneficiaries will receive the full life insurance benefit. 

Generally, the insurance premiums are low and affordable while insurers are young. However, the premiums tend to increase as much as 300% when the insurers get older and become more susceptible to serious illnesses. For this reason, it is highly recommended to sign up for a policy with a longer term.