Term insurance is the most economical type of insurance designed to cover the risk of premature death. The cost of insurance is generally lower for younger individuals and for non-smokers. Term insurance is normally purchased for a predetermined period of time, such as 10 or 20 years. During this period the premiums remain level. After the initial term, many term policies are renewable for additional terms. In many cases an individual may have an insurance need that extends beyond 10 years. A good example of this is a young couple with children. Realistically it will be 20 years before the children will be self-sufficient. In this case, a 20-year term policy is likely most appropriate and cost effective. Term to age 100 is another type of insurance that is generally available for individuals between the ages of 60 and 85 and is very effective for estate planning. Term policies do not have a cash value if you cease paying the premiums and do not pay any type of participating income. Certain term policies allow for conversion to permanent insurance. This conversion right may allow you to address needs that exist at later stages in life.
