Term insurance provides life protection for a stated period, usually without cash value. The central decision is whether the coverage period and benefit pattern match a temporary financial obligation. Learn the policy designs first, then compare what renewal and conversion rights can preserve when a need lasts longer than expected.
Learning path
- Term Life Insurance: The purpose, duration, benefit patterns, and ordinary term's lack of cash value. Compare temporary protection with permanent policies that can build value available under the contract.
- Term Designs and Contract Options: Level, decreasing, annually renewable, and return-of-premium designs, plus renewability and conversion. Separate continuation of term coverage from a conversion to a different policy type.
Apply the unit
A household wants income protection until a child finishes school and a mortgage is paid.
- Choose the facts needed to compare a level term period, a decreasing benefit, and a conversion option; do not assume a renewal keeps the original premium.
Study checkpoint
- Can you match a term design to the need?
- Can you distinguish renewability from conversion?
- Can you distinguish ordinary term coverage from return-of-premium designs by checking refund conditions and any contract cash values?