Temporary life insurance comes in one type of insurance, term. Term insurance is temporary insurance for a specific number of years. The typical policy range is from 5 to 30 years. If you qualify for a ten-year policy then your premium rate is locked in for those ten years. Once your ten-year anniversary is up the premiums will go up. Depending on your age this rate hike could be small or astronomical.
The great thing about term is the cost. If you are healthy and especially younger, although older consumers can still get great prices, then buying a $250k to $500k policy will not take too much out of your pocket. Of course the coverage amount depends on your specific situation.
You can also add a rider to your policy, a rider is simply an add on, in the form of disability rider, additional insured or return of premium. The premiums you paid for term coverage will not be refunded at the end of the term with normal policies similar to car insurance. However, if you purchase a return of premium rider then at the end of lets say a twenty year term, the insurance company will send you a check for all the premiums you sent in, tax free. This check will be thousands of dollars depending on the premium you paid. Of course this rider increases the premium but could be worth the extra money considering mortality tables say you will out live the term.
I will write more about term and start to dive into permanent life insurance in the next part of this series.
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