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Michael Packer is a Michigan Licensed Independent Agent and owner of Oakland Insurance Services Talk to Michael at his direct line (248)601-2696. What is Term Life Insurance?Term life insurance covers the policyholder for a specific period of time, or term—5, 10, 15, or 20 years. The length of the term depends on the needs of the policyholder and the risks the insurance company is willing to take based on the policyholder’s age and health. For example, 30-year-old in good health mostly likely would qualify for a 20-year term life insurance policy, but a 70-year-old might not. Insurability and the cost of the policy are determined by actuarial tables that assess the risk of the policyholder dying during the term. Once the term is over, the term life insurance policy is no longer in effect. The insurance company keeps the money paid into the policy, surrendering nothing to the policyholder when the policy expires. For this reason, term life insurance is five to ten times less expensive than whole life insurance. Term life insurance offers low-cost protection against untimely death. Because it is less expensive, the buyer can afford a much larger death benefit. The death benefit can be used to replace lost income, pay off a mortgage, or fund an education in the event that a family breadwinner dies. Some people choose term life insurance to cover their most productive working years. They are concerned with protecting their families in the event of an early death. They are not worried about what will happen once a mortgage is paid off, children are grown and educated, and retirement investments have been funded.
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