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term life

"Renting" Life Insurance


‚ÄčA Term Life policy has a set duration limit on the coverage period such as 10-, 20-, or 30-year terms sometimes referred to as "level term" policies..  If the insured dies during the specified term of the policy, then a death benefit will be paid.  If the insured does not die within the policy's term, it is then up to the policy owner to decide whether to renew the term life insurance policy or to let the coverage end.  If the policy owner decided to renew the term policy, the insured would then receive the premium rate based on their current age, not the age in which the original term was established, and most term policies have a built-in privilege to convert to a permanent policy regardless of any changes in the insured's health.

*Like a lease for a home or business, you have an agreed upon rent [premium] for an agreed upon period of months or years [term] without building equity [cash value] in the property.  And much like at the end of a lease, you typically have the option to renew, but it often comes with considerations like a rent increase. 

Generally speaking, Term Life insurance is much less expensive when compared to Permanent Life insurance, but unlike most types of permanent insurance, term insurance does not build a cash value.  By not having a cash value, you wouldn't have the options to either borrow funds from the policy, or to transfer cash value to another investment vehicle such as an IRA, Annuity, or Permanent Life policy.