deposit term life insurance

Definition

Policy in which (in addition to the periodic premium) the insured deposits a sum with the insurer for the policy period (usually 10 years) on which interest accumulates. After the expiry of policy period the insured may roll over the sum for another period (and the subsequent periods), or convert the term policy to ordinary life policy, without the need for the evidence of insurability. However, if the insured cancels the policy before the expiry of the first policy period, he or she loses both the deposit and the interest. If the insured dies during the cover period, the deposit plus interest is added to the death benefits.