Term life insurance is a temporary life insurance covering specific period of time. In this type of policy the insured or the owner pays a premium for a period. The insurance company provides monetary benefit to the beneficiary in case of death of the insured during that period. It is the cheapest type of life insurance available to the general public. Usually the benefit received on death of the insured is income tax free.

There are four parties in term life insurance. The owner is the one who pays the premium. The Insured is the one on whose death, a death benefit(face value) will go to the beneficiary. The beneficiary is one who will receive the proceeds of insurance on death of the insured. The insurer is the company providing the insurance. Premium is the monthly or periodic payment made by the owner to the insurance company.

Term life insurance is an insurance policy that will give a lump sum payment to beneficiaries upon the death of the policy holder.

While most people cringe at the bare mention of life insurance there are many important reasons why coverage should be obtained. Simply because a subject puts us ill at ease does not mean that we should not think about it.

The word insurance, on a broader sense means Promise of reimbursement in the case of loss; paid to people or companies so concerned about hazards that they have made prepayments in the form of premium to an insurance company.

In principles, insurance dwells on assumptions such as

1. The losses and consequences are uncertain
2. Rates of losses are fairly quantifiable and predictable
3. Losses are not calamitous
4. Losses are substantial