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Term life insurance is a type life insurance product that covers you for a specific period of time, typically from 5 to 30 years. When you buy term life insurance, you lock in your premium and coverage for the entire term. When your term expires, you may have the option to renew your policy at a higher cost premium or let your coverage expire. Some policies also let you convert to permanent life insurance, typically between one and five years before the policy ends.
When you buy term life insurance, you choose the term length (how long you want to be covered for) and your coverage amount (how much you want your beneficiary to receive when you die). If you die within the term set out by your policy, your insurance company will pay the coverage amount, also known as the death benefit, to your beneficiary.
When should you buy term life insurance?
Term life insurance is best for people who have a temporary need for life insurance. Some examples include: