Insurance Broker | Financial Consultant, Lawrence Insurance Consulting, Southern New Jersey
Term Life Insurance provides benefits only upon the death of the insured individual during the "term". There are many reasons why a individual may chose to purchase a term policy instead of a whole life policy. The answer to your question is tied into the reasons why a individual purchased the coverage.
Level Term Life Insurance policies generally have set periods of time (10,20,30 years) where they will provide benefits, with level term premiums and benefits never change during the "term" or period of time that the individual is covered. There are also increasing/decreasing term life policies that are used to address different needs. The most common example would be a individual being contractually obligated to purchase decreasing term life when obtaining a mortgage. The policy would start out with death benefits equal to the mortgage, and decrease as the individual payed of the mortgage. The end result would be both the policy and the mortgage balance decreasing to $0 by the end of the period.
Level Term Life Insurance is term life insurance that is guaranteed to have the same premium and the same death benefit for a certain number of years. Most level term life insurance comes in terms of 10, 15, 20 and 30 years. Rather than having the premium increase each year as you age, the insurance company "levels" it out over the entire term, then locks it in so that you can continue paying that same rate even if you have a change of health.
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Level Term Life Insurance policies generally have set periods of time (10,20,30 years) where they will provide benefits, with level term premiums and benefits never change during the "term" or period of time that the individual is covered. There are also increasing/decreasing term life policies that are used to address different needs. The most common example would be a individual being contractually obligated to purchase decreasing term life when obtaining a mortgage. The policy would start out with death benefits equal to the mortgage, and decrease as the individual payed of the mortgage. The end result would be both the policy and the mortgage balance decreasing to $0 by the end of the period.