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What is Term Life Insurance? A Simple Explanation for Kids, Teens & Beginners

Introduction to Term Life Insurance for Kids and Teens

This video explains the concept of Term Life Insurance in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about Term Insurance, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

What is Term Life Insurance - A Simple Explanation for Kids Teens Beginners
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Suitable for students from grade levels:

  • Kindergarten
  • Elementary School
  • Middle School
  • High School

The topics covered are:

What is term life insurance?

Term Life Insurance for Kids Teens Beginners
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Term life insurance is a type of life insurance policy that guarantees payment of a pre-agreed amount, called the death benefit, to the beneficiaries stated in the policy, if the policyholder dies within a certain period of time – called the term.

This is in exchange for periodic payments by the policyholder, called a premium. Usually, the term is 10 to 30 years.

If the policy holder is alive when the term ends, they can either:

  • Renew the policy
  • Convert it to another type of life insurance, or
  • Let it terminate, in which case the protection doesn’t continue

How expensive is term insurance? How is the insurance premium decided / calculated?

The cost of term insurance, or the premium, can vary from under $50 to over $100 per month.

This is because the premium varies a lot based on different factors like the policy amount, the policy holder’s age, gender, and health conditions such as existing illnesses or disabilities.

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For example, Angie, a healthy, 30 year old woman, will pay much lower premiums than Sam, a 50 year old man with diabetes, even if the death benefit is the same.

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If the term insurance is renewed, the premiums stay the same, right?

Term Insurance for Kids Teens Beginners - Cost and Premiums
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No. When term insurance is renewed, the premiums are recalculated based on the person’s current situation.

So if Tom bought a term life insurance policy when he was 40 with no health problems, and renewed it when he turned 60 but had been diagnosed with a heart condition, he would pay higher premiums after the renewal of the policy.

So is term life insurance right for me?

That’s a great question, Sooper Cooper. But that’s a topic for another time…

Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens

What is term life insurance
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