TERM POLICY Meaning and
Definition
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A term policy is a type of life insurance that provides coverage for a specific period or term, typically ranging from 5 to 30 years. It is designed to offer financial protection to the policyholder's beneficiaries in the event of the insured's death during the term of the policy.
Term policies are characterized by their simplicity and affordability compared to other types of life insurance, such as whole life or universal life insurance. The premium payments for term policies are usually lower because they are based solely on the insured's age, health, and the length of the policy term.
Unlike permanent life insurance policies, term policies do not accumulate cash value over time. They only provide a death benefit to beneficiaries if the insured passes away within the specified term. If the policyholder survives the specified period, the coverage ends and there is no payout.
Term policies offer policyholders the flexibility to choose the length of the policy term and the coverage amount based on their needs and budget. It is a popular choice for individuals who want coverage for a specific period, such as when they have dependents who rely on their income or when they have outstanding debts, such as a mortgage, that they wish to protect their loved ones from.
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A life p. payable only if death occurs before the end of a specified period; designated more exactly as a one-year term p., a ten-year term p., etc.; see also renewable term p.
A practical medical dictionary. By Stedman, Thomas Lathrop. Published 1920.
Common Misspellings for TERM POLICY
Similar spelling words for TERM POLICY
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