What is term life insurance?
Term life insurance is better understood as a life insurance policy that covers you for loss of life for a fixed term. A policy that is fixed term has a limited duration and once it has expired, it will be entirely up to you whether you want to renew your coverage or simply let it lapse. If you let the policy lapse, you will not be insured and your dependents will not receive a lump sum pay-out in the event of your death.
The cost of the premium you pay for your term life insurance policy will depend on a number of factors, namely your age, health and the life insurer’s determination of life expectancy (meaning, how long the insurer thinks you will live). The amount you will be covered for will be fixed at the beginning of the policy and will not change. It is important to bear in mind however, that if your policy is for a fixed term and you decide to renew when it runs out, the premium will be recalculated based on your increased age and will therefore cost you more.