Term Life Insurance

Term life insurance is a type of life insurance policy that provides coverage for a specific period of time (called the term), such as 10, 15, 20, 25, 30, or 35 years. 

If the insured person passes away during that term, the policy pays a death benefit to their beneficiaries. If the term ends and the insured is still alive, the policy expires with no payout, unless it’s renewed or converted to a permanent policy.

1. Affordable Premiums:
   Term life insurance is generally less expensive than permanent life insurance because it provides pure protection with no savings or investment component.
2. Simple and Easy to Understand:
   The coverage is straightforward — if you pass away during the term, your beneficiaries receive the benefit.
3. Flexible Terms:
   You can choose a term length that aligns with your financial responsibilities — for example, covering a mortgage or your children’s education years.
4. High Coverage Amounts:
   You can typically get a large death benefit at an affordable cost compared to other types of life insurance.
5. Convertible Options:
   Many term policies allow you to convert to a permanent policy later, without a new medical exam, if your needs change.
    

1. Temporary Coverage:
   Once the term ends, coverage stops unless it is renewed — and renewal premiums can be significantly higher due to age or health changes.
2. No Cash Value:
   Term life doesn’t build savings or investment value — if you outlive the policy, you get nothing back.
3. Rising Costs at Renewal:
   Renewing a term policy later in life can be expensive since premiums increase with age.
4. May Expire Before You Need It:
   If you still have dependents or debts after the term ends, you might be left without coverage.
    

• People seeking affordable, temporary protection
• Covering specific financial obligations (e.g., a mortgage or a child’s college)
• Young families on a budget
• Individuals wanting maximum coverage for minimal cost

What are Living Benefits in Term Life Insurance?

Traditionally, term life insurance is designed to pay a death benefit to your beneficiaries after you pass away. However, many modern term life policies now include or offer “living benefits” — features that let you access part of your death benefit while you’re still alive under certain conditions.

Living benefits (also called accelerated benefits) allow the policyholder to receive money from the death benefit if they experience a serious health condition, such as:

• A terminal illness (life expectancy of 12–24 months or less)
• A critical illness (heart attack, stroke, cancer, etc.)
• A chronic illness (unable to perform daily living activities such as bathing, dressing, or eating)
   

The money can be used for any purpose — not just medical expenses — such as:

• Paying medical bills or long-term care costs
• Covering lost income
• Maintaining household expenses or debts
   

1. Financial Support During Illness:
   Provides access to funds when you need them most, helping reduce financial stress during a health crisis.
2. Flexibility:
   You can use the accelerated benefit for any expense, not just healthcare.
3. No Need for Separate Policies:
   Eliminates the need to buy additional long-term care or critical illness insurance.
4. Peace of Mind:
   Offers protection both while living and after death.
    

1. Reduced Death Benefit:
   Any money you receive as a living benefit will reduce the amount paid to your beneficiaries when you pass away.
2. Eligibility Requirements:
   You must meet the policy’s medical criteria (e.g., proof of terminal or chronic illness).
3. Possible Fees or Interest:
   Some insurers charge administrative fees or interest on the amount advanced.
4. Tax Implications:
   In most cases, benefits for terminal illness are tax-free, but other types (like chronic illness) may have tax consequences depending on your situation.
    

If you have a $500,000 term life policy and are diagnosed with a terminal illness, your insurer might allow you to access up to 75% ($375,000) of the death benefit now. 

The remaining $125,000 would be paid to your beneficiaries after your passing.

Why you need Term Life Insurance:

https://www.youtube.com/watch?v=F1cZzcq82zA