Choosing the right type of life insurance policy can be very confusing and there are various factors that need to be considered before one takes out a policy. Knowing important facts about term life insurance can help in choosing the right policy that fits the need and budget of people.

Here are few facts of term life insurance-

1. The premium for term life insurance policy is less as compared to permanent life insurance since there is no cash value.
2. At the end of the term period, term insurance expires. There is no cash value and payout if the insured does not die in the term period.
3. Many term life insurance policies have conversion option which allows the owner of the policy to convert his/her term policy into permanent life insurance without taking any medical exam or providing health information.
4. The death benefits that are received by the beneficiaries are tax-free. No income tax has to be paid on death benefits from life insurance.
5. Some term life insurance policies come with 'Return of premium' feature. It costs more and provides refund of all or some amount of premium at the end of the coverage period if no death benefit is paid.
6. Term life insurance policy is for a specified period and is beneficial for those who cannot afford high premium and those with limited budget.
7. People with medical condition or illness will obtain term life insurance policy at a higher rate. Similarly smokers are charged more for life insurance policy and receive fewer benefits as compared to non-smokers.

Knowledge of these facts can be very useful before taking out a life insurance policy and avoid expensive coverage policies. Term life insurance is a smart investment for healthy, young people who are looking for a low cost insurance plan to protect their families financially in-case they die.