Term Life Insurance Definition

Term Life Insurance has been with us for a long time. It is the cheapest of all life insurance policies. Term life insurance is life insurance that provides protection to the named insured during a specified time period. That is what differentiates it from other forms of life. Term insurance has no equity or cash value accumulation and it is mainly purchased to guarantee that the death benefit. There are three basic types of life insurance.

1. Reducing Term - This policy is most commonly associated with mortgage protection insurance. Notional amount declines over a specified time period. A thirty is a mortgage for homeowners are adequately insured with thirty years decreasing term policy for the same mortgage amount. The mortgage balance and long-term policy to reduce at a similar pace, and so homeowners can be sure that his home will be paid for if he or she lives or dies.

2nd Level Term - Level term insurance also provides protection for a specified period. Notional amount remains level throughout the period indicated. These policies are often purchased for short-term debt or intermediate-term liabilities. You can purchase 5, 10, 15 and 20 years of policy from most insurance companies.

3rd Annual Renewable - This form of term insurance is the least recognized of all term policies. It provides a level amount of insurance but the premium increases each year of political renewal date. Premiums may be very low at first, but can escalate into very high premiums as the insured gets older.

All these insurance Term life insurance has the advantages but the common denominator that gives a life its definition remains the same. Policy is always for some time and there is no equity or cash value accumulations. These two features define term life insurance.