Term life insurance is the most common and simplest form of life insurance. The owner of the policy specifies a length of time (usually in increments of 5 years beginning with 5 years and extending to 30 years) for which they wish the policy to be in effect, and then pays premiums, either in a lump sum or month to month, in order to keep the policy in force. There are often clauses within any life insurance policy protecting the guarantor, or life insurance company, against paying out in the event of suicide or fraud. Usually there is a time limit of two years after the issuance of the policy in which the guarantor can contest the payment of the policy upon the death of the insured for these reasons.
With term life insurance, the proceeds of the policy go to the designated beneficiary upon sufficient proof of the death of the insured, such as a death certificate. Premiums are usually less for younger people and remain constant for the term of the policy. However, premiums increase as the age of the proposed insured increases. A person who is 20 years old and in optimum health will pay a significantly lower premium than a person who is 50 years old for the same dollar amount and length of term coverage.