Term Insurance is the simplest form of life insurance. It provides financial protection for a specific time, usually from one to 30 years. Term life insurance policies are relatively inexpensive and are well suited for goals, such as insurance protection during the child-raising years or while paying off a mortgage. They provide a death benefit, but do not offer cash savings.

Purchasing term insurance is like renting a home. It is a short-term solution. Monthly costs are usually lower, but you will not be building equity. Just as many people rent (while saving to buy a home), individuals who need insurance protection now, but have limited resources, may purchase term coverage and then switch to permanent protection. Others may view term insurance as a cost-effective way to protect their family and still have money to put into other investments.

Policies generally last for 1, 5, 10, 15, 20 or 30 years.

There are three major types of term insurance:

• Level Term Insurance - Level Term Insurance policies provide a fixed premium for a certain number of years, usually 10 or 20 years, while the death benefit remains unchanged. For example, a 5-year level policy with $10,000 in coverage means the company will pay $10,000 if you die any time during the 5 years the policy is in effect.
  The advantage is that you lock in a certain rate for the period of the policy. The disadvantage is that rates will jump considerably if you want to renew with another level policy.
  
  
• Decreasing Term Insurance - The death benefit in this type of policy decreases over its term. For example, you might start with $100,000 of coverage and the amount of coverage would decrease by $10,000 each year for 10 years. The premium will vary over the term of the policy.
  
  
• Increasing Term Insurance - Provides a death benefit that increases over the term in a specified manner. For example, the benefit for a 5-year increasing term policy may have a face amount that starts at $10,000 and then increases 5% every policy anniversary date. Or the coverage may be tied to increases in the cost of living as measured by a standard index. Premiums usually increase with the coverage in this type of policy.

Features of term policies:

• Renewable Term Insurance - Yearly renewable term insurance offers a longer term, usually for five, 10, or 20 years. By buying a longer term policy, your costs can be stretched out to avoid the annual increases found in non-guaranteed term life.
  
  
• Convertible Term Insurance - Convertible term is like yearly renewable term but it also offers conversion to a permanent policy in the future - when regular term premiums might become cost-prohibitive or if your health declines. Convertible term policies usually provide the maximum protection with the smallest amount of cash outlay required. This is a good choice especially for young people who are unable to afford the higher cost of permanent insurance right now but need maximum life insurance and also want to have the option of converting to permanent coverage in the future.

• A.M. Best - Insurance Information Resource
  
• American Insurance Association (AIA)
  
• American Risk and Insurance Association (ARIA)
  
• Coalition Against Insurance Fraud
  
• FirstGov for Consumers
  
• Insurance Information Institute (III)
  
• National Association of Insurance Commissioners (NAIC)
  
• National Insurance Crime Bureau (NICB)