Business Glossary

form of life insurance, written for a specified period, that requires the policyholder to pay only for the cost of protection against death; that is, no cash value is built up as in whole life insurance . Every time the policy is renewed, the premium is higher, since the insured is older and therefore statistically more likely to die. Term insurance is far cheaper than whole life, giving policyholders the alternative of using the savings to invest on their own.

life insurance that stays in effect for only a specified, limited period. If an insured dies within that period, the beneficiary receives the death payments. If the insured survives, the policy ends and the beneficiary receives nothing. For example, if an insured with a five year term policy dies within that period, the beneficiary receives the face amount of the policy. If the insured survives the five year period, the policy ends, with no benefit payable.

coverage that stays in effect for only a specified, limited period. If an insured dies within that period, the beneficiary receives the death payments. If the insured survives, the policy ends and the beneficiary receives nothing.