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What is term life insurance?
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Term life insurance provides for the payment of the sum assured only if the life assured dies within a specified period. If the life assured does not die, the policy ceases and the premiums paid are retained by the insurance company. Thus, the premiums paid contain no savings element. As such, term life insurance provides the maximum protection on the life assured for a specified number of years.
Term insurance is regarded as temporary insurance (as opposed to permanent insurance like whole life), and as such, it does not provide any surrender values, paid-up values, loan values or any of the non-forfeiture privileges.
This relatively inexpensive form of insurance cover is useful for the following purposes:
- To provide life insurance cover for a short period
- To cover a loan
- To cover the needs of a family in the event of the premature death of the life assured, before a house mortgage is repaid, or while the children are young.
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