There are no bells and whistles with term life insurance, it is a life insurance policy that builds no cash value and purely pays out to the value of the insurance policy if the person who is insured dies during the period for which they are insured.

Given the nature of a term life insurance policy, in that the only time the insurance company will have to pay out is if the person insured dies during the term of the insurance, it is the cheapest form of life insurance.

Term life insurance is generally used as a short term measure and in its most basic form provides life insurance cover for just one year (renewable annually). Such a short period of life insurance comes with a risk in that if the insured becomes ill during the term of the life insurance but doesn’t actually die until the insurance policy has expired there would be no way of renewing the life insurance policy due to the pre-existing condition.

If you are looking for any form of longer term benefit a more preferable option for term life insurance is to purchase an ‘annual renewable term’ policy which is term life insurance that is guaranteed to be able to be renewed for the length of the ART. This form of term life insurance is slightly more expensive than the basic one year policy as there is a greater likelihood that the insured could die during the insurance term.

The most common form of term life insurance is a level term policy which covers a specific period generally for anything between 10 to 40 years. The annual premium remains constant over the term of the insurance with longer periods incurring a higher level of premiums due to the increased risk with age.

A good many term life insurance polices come with the option to convert the policy to a permanent life insurance policy at any time during which the term life insurance policy is in force.

The cost of term life insurance varies considerably depending on age and the insurance term.