Designed to provide coverage for a specific period of time such as for 10 years or 20 years, this type of insurance is typically the lowest-cost option for young adults. A basic policy will provide the chosen beneficiaries with a death benefit that is paid on a tax-free basis. The death benefit amount is specified in the policy and the death must occur during the time of coverage.
There are policies with smaller coverage amounts that can be Simplified Issue - meaning that no medical exams are required. However, in most cases, you may be subject to Medical Underwriting that could require a medical exam and even a motor vehicle background check. Family history can also play a factor in determining eligibility.
Medical exams are typically done at the expense of the insurance company.
Premium Rate Determination
Generally, premium rates are based on your health status, coverage amount, length of the term policy, smoking status, and gender.
If you are relatively healthy and barring any other signficant factors, your premium for a Medically Underwritten Policy can be significantly less than a Simplified Issue Policy.
Common Marketing Method
Some insurance agents market this type of insurance as "mortgage insurance". The intent is to provide coverage for the length of the mortgage. Sometimes the solution for this is structured as a combination of term and whole life.
Note that many of these mortgage insurance policies are sold as Simplified Issue, which is not necessarily a good thing. Make sure you ask your agent about this.
At the end of the term period, typically, you can renew the policy and keep it in force by paying a new premium. That premium can be SIGNIFICANTLY higher than the previous premium and it may continue to increase annually.
Some term life policies can not be renewed beyond a certain age.
Some term life policies allow you to convert them to either Universal Life or Whole Life Policies. The conversion privilege may only be available for a portion of the term policy so make sure to check your policy specifics.