Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
Video Transcript: Today's question is: What does term life insurance cover? Remember first of all, if we're using term, it only covers that period in time. If you buy a 20-year term, as an example, it's only going to cover you for 20 years. If you buy $ 1/2 million dollars of death benefit, you'll have it for as long as you pay your premiums on time; you'll have that coverage. What is it good for? How does it cover? It's going to cover anything that you think that you need. Let's say, at $ 1/2 million, you had a mortgage at $250,000, you had credit card debt, you had car debt, you had educational debt. You want to cover that so that your spouse or your beneficiaries will not be actually saddled with your debt if something happened to you.
When I'm looking at, 'What does term life insurance?' it's the time zone, how long do I have, what obligations would I have, and how can I relieve my beneficiaries from any of those obligations if something happens to me?
Term life insurance covers nearly all causes of death: accidental death, death caused by health related issues, and death due to "old age". Because it is temporary in nature, many people will find that their term policy has lapsed before death occurs. However, if you keep it in effect by paying the premium (and it is possible to convert many term policies to permanent policies, if you do it during the window of time provided for that purpose), it will pay the death benefit for almost all types of death.
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When I'm looking at, 'What does term life insurance?' it's the time zone, how long do I have, what obligations would I have, and how can I relieve my beneficiaries from any of those obligations if something happens to me?