Term life insurance is a simple and cost-effective option that provides coverage for a specific period—usually between 10 and 30 years—selected by the policyholder. If you pass away during that term, your beneficiaries receive a lump-sum cash payout known as the death benefit.

Unlike permanent life insurance options like whole life or universal life, term life policies do not accumulate cash value over time.

Ultimately, your beneficiaries can use the cash payout however they see fit. Common ways people choose to use the funds include:

Paying off a mortgage or covering rent

• Replacing lost income

• Paying down loans and other debts

• Funding children’s education

• Covering day-to-day living expenses

• Paying for funeral and final expenses

A simple rule of thumb is to multiply your annual income by 10. For a more personalized estimate, add up your long-term financial obligations—like a mortgage, debts, and future expenses—and subtract your current assets. The difference is the amount life insurance should cover.

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Term life insurance is a practical and affordable option for those looking to protect their loved ones during specific stages of life. When selecting the right policy, it’s important to align the coverage amount and duration with your financial goals and responsibilities.

Many people choose term life insurance because it typically offers lower premiums than permanent policies, especially in the early years. This makes it ideal for those who need substantial coverage at a lower cost—such as during periods of high financial obligation, like raising a family or paying off a mortgage.

Another major benefit is that term life insurance comes with fixed premiums for the length of the term. This means your payments remain the same each year, making it easier to plan and manage your budget.

If you outlive your term life insurance policy, you’ll have a few options when it ends. You can choose to apply for an extension to maintain continuous coverage, or you may decide to purchase a new policy with updated term lengths and coverage amounts based on your current needs. Alternatively, you can opt not to renew or replace the policy if you no longer require coverage.