Term insurance is the most basic form of life insurance and, therefore, the easiest to understand. At its simplest level, term insurance provides life insurance for a defined period (usually a one-, five-, or ten-year term). For that insurance, you pay a monthly, quarterly, annual, or semiannual premium that remains constant during the specified term. But that’s pretty much the only constant. I can’t even say that the death benefit remains the same for the entire term of the policy because various options are available, such as decreasing term insurance and increasing term insurance, in which the death benefit changes each year (rarely more than 20 percent above or below the original policy amount). These two products are distinguished from level term insurance, in which the death benefit remains the same for a specified period. Term insurance provides a benefit for others if you die during the specified period. Term insurance is not an investment —you receive no benefits other than the security of knowing that if you die, the insurance proceeds go to your beneficiaries.
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