Business, Legal & Accounting Glossary
A type of life insurance that protects the insured person for a certain amount of time; the “term” that is stated in the policy.
Term life insurance is a form of life insurance that provides coverage for a specific period of time.
Term life insurance is generally bought for a period of years or decades and covers accidental death and various injuries.
Unlike whole life, which provides coverage until death or age 100, term life insurance does not have an investment element to it; thus, term life insurance cannot provide any money in addition to its stated amount.
If the holder of a term life insurance policy or his/her beneficiaries makes no claims during the coverage period, the policyholder or beneficiaries will reap no returns from the policy. Because of its shorter duration and lack of investment component, term life insurance tends to be less expensive than whole life. However, premiums do rise as the term life insurance policyholder ages.
In the divorce decree, the husband was required to carry a term life insurance policy for $500,000 to cover the child support obligation.
The maturity date on her term life insurance is in June, and she will use the cash surrender value amount to pay for her first year of graduate school.
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This glossary post was last updated: 15th February, 2020 | 3 Views.