GLOSSARY · INSURANCE
Term life insurance
Life insurance that pays a death benefit if the insured person dies within a set term, commonly 10, 20 or 30 years, and ends with no value otherwise. Because it carries no savings component, it costs far less per dollar of coverage than permanent life insurance. It suits needs that shrink over time, such as raising children or paying off a mortgage.
Also called: term insurance, level term life
FORMULA
Coverage need = present value of the yearly need over the years it is needed + debts + final and education costs − savings − coverage already in force
COMPUTE IT WITH YOUR NUMBERS
LEARN IT PROPERLY
CHAPTER · INSURANCE PROTECTION ESSENTIALS · FOUNDATIONSLife Insurance and a Plan for the People Who Depend on YouRELATED TERMS
SOURCES
- 26 U.S. Code § 101, Certain death benefits. U.S. Code, via Legal Information Institute.
- Life Insurance Buyer's Guide. National Association of Insurance Commissioners.