Term life insurance is the original form of life insurances and is the pure insurance policy as it does not build any cash value. This is exactly opposite to permanent life insurance such as whole life, universal life and variable universal life.
It is a policy of fixed duration of coverage. If the insured person dies within that duration the nominee gets the money or else the policy gets over without much benefit. When the policy ends it is the decision of the policy owner to let the coverage period end or renew the term life insurance policy.
The primary use of term life insurance is to give death benefit. It also includes other benefits like emergency money crisis, education, etc.
This policy is affordable and it can be converted to any permanent life insurance policy as per the choice of the policy holder. It is often most inexpensive way to purchase a substantial death benefit on a coverage amount. It completely functions similar in a manner similar to most other types of insurance.
For ex. A home owner policy will satisfy claims against the home if it is damaged or destroyed in some accident. Whether or not these events will occur is uncertain, and if the owner discontinues coverage because he has sold the coverage then the company will not pay any amount on the damage. This is purely risk protection at difficult times.
It is purely a death benefit. Its primary use is to provide coverage of financial responsibilities for the insured .It also includes consumer debt, dependent care, school and college fund, funeral cost and mortgages.
