Deposit Term Life Insurance
What Does Deposit Term Life Insurance Mean?
Deposit term life insurance is a type of life insurance that requires a deposit in addition to the regular premiums paid. This deposit is made throughout the policy period. Once the policy period ends, both the deposit and the accumulated interest can be used to pay for another policy period or to purchase an ordinary life insurance policy. It works differently from a standard term life insurance policy, where premiums simply buy coverage for the term with no savings component built in.
Insuranceopedia Explains Deposit Term Life Insurance
Deposit term life insurance can be voided for several reasons. For instance, if a person stops paying premiums during the policy term, the policy may be invalidated. At the end of the deposit term, if the policyholder decides not to purchase additional life insurance, they have the option to withdraw the deposited funds. Due to the accumulated interest, the total amount available could be significantly higher than the original deposit. Because it blends a death benefit with a forced savings element, deposit term falls somewhere between pure term coverage and permanent policies. A breakdown of how these categories compare can be found in our guide to the different types of life insurance.
