Term insurance (also known as temporary insurance) is the most basic form of life insurance. It is a pure risk cover for a limited period with no element of investment. For these reason it is also the cheapest. Term life insurance provides for life insurance coverage for a specified period term of years for specified premiums.
The sum assured is payable only if the death of the life assured occurs with in a specified period of time. There is normally no cash value or surrender value at any time.
There are three factors to be considered in term insurance: sum assured, premium to be paid, and length of coverage (term).
Term insurance is a straightforward protection business. A policyholder insures his life for a specified term. If he dies before that specified term is up, his estate or named beneficiary receives a payout, if he survives the term, the cover ceases and he receives nothing.
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