Term Life Insurance

Term life insurance is temporary.  It is designed to last only for a specific period of time.  Then, it self-destructs!

There's nothing wrong with term as long as you understand the pros and cons. Just keep in mind that only a very small percentage of total death claims each year are paid to term insurance beneficiaries.

This is because the policy typically expires before the insured does!

A term insurance policy is cheap... at least in the early stages. In fact, it's possible to buy one that guarantees a level premium for as long as 30 years... depending on your age.

But, when the guaranteed period expires... the price becomes unaffordable.  So, if you didn't die within the guaranteed level premium period, you probably will not have the policy in force when you actually do die.  You simply won't be able (or willing) to pay the premium.

And, what about all that money you paid for the last 30 years... it's gone - down a rat hole forever!  Actually, there is a policy that returns your premium at the end of the term, but it's way too expensive - and it doesn't really solve the basic problem of having the insurance in force when you die.

If you truly want life insurance only for a specific period of time, then term insurance might be the answer. For example, if you want to cover your outstanding mortgage, a 30-year guaranteed level premium plan might be just the ticket.

Another example would be to back up a loan that must be paid off within a specific period of time. The bank (or lender) might require life insurance just in case you kick the bucket before having paid off the loan.

By the way, don't fall for the corny line that you only need the death proceeds until the kids are grown up or you have finally reached retirement. The need for life insurance doesn't go away... it simply changes its color - like a cameleon!

Before making your final decision, consider taking a look at universal life because it gives you a lot of flexibility for a reasonable price.