Term Insurance Explained: What, Why and How
Term insurance is a pure risk cover product. It pays a benefit only if the policyholder dies during the period for which one is insured. Term life insurance provides for life insurance coverage for a specified term of years for a specified premium. The premium buys protection in the event of death and nothing else.
The three key factors to be considered in term insurance are:
- Sum assured (protection or death benefit)
- Premium to be paid (the cost to the insured), and
- Length of coverage (term).