Term Life Insurance is coverage that will pay out if you die before the end of the term. E.g. Let's say you have 10 year term life insurance and let it go when the term ends, because you do not want to pay the higher premium that begins at year 11. If you die midway through year 11, the policy will not pay a death benefit.
In contrast to that, Non Term Life Insurance will pay out for as long as it is set up to pay out. Most people select a non term policy that will last their entire lifetime.
There are other differences between Term and Non Term (usually called Permanent) Life Insurance. Permanent Life Insurance can have cash values, whereas Term Life Insurance almost never has cash values. You can design Permanent Life Insurance to be paid up in a certain number of years, so that you don't have to bother with paying premiums later in life. Term Life does not have that option. Some Permanent policies are more flexible than Term.
As you might expect,the cost of Term Insurance is usually less than is the cost of Non Term Insurance. It can be helpful to discuss your needs with an experienced agent so that you can balance cost with getting the best type of coverage for your needs.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Non-term insurance is permanent insurance. Permanent insurance accumulates more money than is necessary in the early years of the policy to provide a level death benefit at a level premium. A term policy computes the actual mortality losses each year. If you want a ten year term policy they basically add the costs together, divide it by ten and that is the premium. That principle holds true until the term policy does not renew any longer. If you die during the term of a term policy that is a good deal, if you don’t, it was just an expense and you don’t have coverage any longer.
That is a great question, and one of the most common ones I get! There are two types of life insurance, term and whole life ( non-term). The term policies are very cheap, because they are bare bones policies with no frills, and are seldom paid out. The only way to collect on this type of policy is to pass away during the specified term period. This period is generally stated in a number of years, 5, 10, or 20 for example; but some companies like AARP, or AAA will market term policies that end when the insured turns 80, so the end date is set, not necessarily the number of years until that point. In any event, the term policy ends at that point, and it is as if it never existed. You may be able to renew it yearly, but the price increases dramatically ( yes, I mean dramatically) each time. A whole life policy will last as long as you do, and generally the price never increases. It will be more expensive, but your payout is guaranteed, as long as the policy remains in force, and it will have a cash value feature that is great if you ever get into a bind, and need some quick no hassle loans. That is a quick explanation, I hope it helped. Thanks for asking!
.JPG){kind=avatar}
In contrast to that, Non Term Life Insurance will pay out for as long as it is set up to pay out. Most people select a non term policy that will last their entire lifetime.
There are other differences between Term and Non Term (usually called Permanent) Life Insurance. Permanent Life Insurance can have cash values, whereas Term Life Insurance almost never has cash values. You can design Permanent Life Insurance to be paid up in a certain number of years, so that you don't have to bother with paying premiums later in life. Term Life does not have that option. Some Permanent policies are more flexible than Term.
As you might expect,the cost of Term Insurance is usually less than is the cost of Non Term Insurance. It can be helpful to discuss your needs with an experienced agent so that you can balance cost with getting the best type of coverage for your needs.