Temporary Life Insurance
Definition - What does Temporary Life Insurance mean?
Temporary life insurance is coverage that has an expiration date and is not guaranteed to last over an insured’s entire life. For example, an insured might buy a five-year temporary life insurance policy. If the insured dies within five years of buying the policy, their coverage will pay out the death benefit. If the insured lives longer than five years, their policy expires and the insured will no longer have life insurance coverage.
Insuranceopedia explains Temporary Life Insurance
Temporary life insurance is less expensive than permanent insurance for the same amount of coverage. Since these policies can expire, insurance companies are less likely to pay out a death benefit, so they can afford to charge less.
These policies can be useful for insurance needs that eventually end, like covering a mortgage or providing for young children until they grow up. The downside of temporary life insurance is that once a policy expires, the insured will no longer have coverage. They can try buying a new policy but it will be more expensive. The insured will also need to go through health underwriting again so there’s no guarantee they will be able to qualify for a new policy.