Term life insurance is a type of policy that has a defined start and end date. Term life only pays if the insured person dies during the term of the insurance policy.

Term life insurance benefits

The main benefit of term life insurance is that it tends to be less expensive than whole life insurance. It may also be eligible to be converted to a whole life insurance policy if you choose to do so. On the other hand, your age and any emergency health issues can make it more difficult to qualify for a renewal once your term life insurance policy ends. These policies tend to be more “straightforward”, with a set number of years, and they don’t have investing or savings benefits.

Typically less expensive
Easier to understand than whole life policies
May be eligible to convert to a whole life policy

Other considerations

The main thing to keep in mind about term life insurance is that it’s temporary. That may or may not be right for your circumstances, based on the health and age of the insured individual. Changes in your health or age may also impact your ability to renew your term life insurance policy if it lapses. There are also no wealth-generating or tax-planning strategies to these types of policies.

You only have coverage for a set amount of years
These policies cannot be used for wealth-building