Life insurance policies can be designated for a certain length of time or for no specified length. When you are talking about term life insurance, the name says it all. The policy is for a specified term. Now, there are exceptions even with term life policies that we will discuss, but for basic term life insurance the policy will begin and end at specific dates.

Term Life Insurance

Term life insurance is easily explained and easy to understand. Let's imagine you decide to purchase life insurance. You research the best providers and find a company that you like and set up policy reviews. When you begin to look at policies you will likely have multiple options. The most simple, well-known style of policies is term life. In exchange for monthly fixed premium payments your beneficiary will get a guaranteed death benefit if you were to pass within the specified time limit of the policy. Think of it as an expiration date. If you buy a policy that covers you until you are 80-years-old, then that is the expiration date of the policy. So in our example you are 30-years-old. You opt to buy a term life policy that will cover you until you are 75. When you reach your 75th birthday that policy would no longer exist. As was mentioned earlier, there is a sometimes an exception. The insurance company may opt to extend the policy with higher premium payments, but that is not guaranteed.

It is important to remember how insurance companies operate. In order for an insurance company to be profitable they must measure the risk they take in covering people's lives in exchange for the dollar amount of premiums they take in. Now, ideally they would love to cover everyone at a young age for a term that expires before the average life expectancy. Of course, there is much more to it than that. They have to weigh the risks of lifestyle choices, such a smoking, or chronic disease, like Diabetes, and figure out how that will affect the life expectancy of a potential customer. This process is one of the reasons that term life insurance can be the most affordable option for young people. When you buy a policy when you are young, you are a cheaper risk and thus you pay less for the policy.

Insurance Through Your Life

There are reasons for short term and long term policies. It really depends on what you need and where you are in your life. If you are in your 30s and you have young kids you may want a short term policy to cover your family for a ten to twenty year period. This can be a time in your life when your debt is higher and you want to ensure your income is replaced should something happen to you. If you are in your 40s and your mortgage is winding down, your children are teens and moving toward college, you may not need quite as much coverage and might choose to let a term life policy expire and move toward a whole life or universal life policy as an investment tool.

Your insurance policy should suit your needs. You should utilize different types of policies to meet your specific needs at certain times in your life. Research all your options and check with multiple providers to ensure you get the policy you want, at a price you can afford, and for a term that meets your current needs. "How long will my policy be good for?" Only you can answer that question.