What it is
Term life insurance provides death-benefit coverage for a defined term while the contract remains in force. It generally does not build cash value.
Why it exists
It separates protection for a period of financial responsibility from a savings or investment account.
When it may help
It can help frame a review of coverage tied to an existing mortgage, dependent support or another time-limited obligation.
When it may not fit
It does not guarantee affordable coverage after the initial term or build a cash balance for retirement spending.
Tradeoffs and access
Compare the level-premium period, renewal premiums, maximum renewal age and any conversion option. Renewal and conversion are different: one continues term coverage under its rules, while the other may permit movement to permanent coverage. Missing a deadline can remove an option.
Tax considerations
Premiums for personal life coverage generally are not treated as deductible household expenses. Death benefits and any interest must be reviewed under the applicable tax rules.
Common mistakes
Do not assume the initial price lasts forever, call an expired policy active, or cancel a policy solely because a new application has been submitted.
Fictional example
Fictional Alex discovers that a policy’s level-premium period ends before an expected caregiving obligation. Alex records the date and asks the insurer about options without assuming renewal costs.
Questions to ask
When does the term or level premium end? Is renewal available? What conversion deadline applies? Is employer coverage portable?
What to record in Planstead
Record coverage amount, insurer, insured person and relevant review dates. Put renewal or conversion questions into Actions.
Next step
Obtain the current schedule of premiums and contract terms before deciding whether to retain, replace or change coverage.
Sources
Primary sources reviewed 2026-09-14. A source describes its own rules; the fictional examples illustrate questions, not a recommendation.