Term life insurance
Life insurance that covers you for a fixed period, typically 10–30 years.
Full definition
Term life insurance provides a death benefit if you die during the policy term. If you outlive the term, the policy expires with no payout. It's the most straightforward and affordable type of life insurance — a healthy 35-year-old can get $500,000 in coverage for around $25–30/month on a 20-year term. Most financial advisors recommend term for income replacement needs.
Real-world example
You buy a 20-year, $750,000 term policy at age 32. Your premium: $38/month. If you die anytime before age 52, your family receives $750,000. If you're alive at 52, the policy ends.
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Life insurance that covers you for a fixed period, typically 10–30 years.
Related terms
- Whole life insurance
Permanent life insurance with a savings component that builds cash value.
- DIME method
A formula for calculating life insurance needs: Debt, Income, Mortgage, Education.