Definition

Noun: A type of life insurance policy that provides coverage for a specified, limited period (the "term"). If the insured person dies during this term, the policy pays a death benefit to the beneficiaries. It is characterized by lower initial premiums compared to permanent life insurance and does not accumulate cash value.

Usage

Term insurance is purchased to provide financial protection for a specific timeframe, such as the years of a mortgage or until children become financially independent. - He purchased a 20-year term insurance policy to ensure his family's security while paying off the home loan. - The affordability of term insurance makes it a practical choice for young families.

Advanced Usage

• "Level term insurance": A policy where the premium and the death benefit remain constant throughout the term.
• "Decreasing term insurance": A policy where the death benefit decreases over the term, often used in tandem with a repayment mortgage.
• "Renewable term insurance": A policy that allows the insured to renew coverage at the end of the term without a medical exam, though premiums increase with age.

Variants and Related Words

• Term life insurance: The full, more common name for this insurance product. It is synonymous with "term insurance."
• Permanent insurance (n): A contrasting category of life insurance (e.g., whole life, universal life) that provides lifelong coverage and includes a cash value component.

Synonyms

• Temporary life insurance: Emphasizes the finite coverage period.
• Pure life insurance: Highlights that the policy is solely for the death benefit without an investment or savings element.

Related Phrases

• Convertible term insurance: A policy that includes an option to convert it into a permanent life insurance policy without undergoing a new medical evaluation.
• Annual renewable term (ART): A one-year term policy that is guaranteed renewable each year, with premiums increasing annually based on age.

Noun

1. low-cost insurance that is valid only for a stated period of time and has no cash surrender value or loan value
   • term insurance is most often associated with life insurance policies