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TERM LIFE INSURANCE

Understanding Term Insurance

TERM LIFE INSURANCE

Peace of Mind

There are several types of term insurance policies available. Level premiums are often offered for the duration of the policy, such as ten, twenty, or thirty years. Such policies are called level term policies.


Convertible Term
Convertible term life insurance allows a term insurance policy, which has a limited number of years before expiring, to convert into whole life or permanent insurance. By converting a term policy to permanent insurance, the policyholder doesn't have to undergo a medical exam or have any health conditions considered when the policy is converted.
Increasing Term
Some policies allow you to increase the death benefit as time goes on. The premium increases as well, but it allows policyholders to pay lower premiums early on in life when they have a lot of bills and expenses. The increasing term prevents having to qualify for another policy at an older age to get the added benefit as would be the case with traditional term insurance.
Mortgage Term or Decreasing Term
A mortgage term or decreasing term policy is the opposite of the increasing term because the death benefit amount decreases over time. The goal is to match the decline of the term benefit to the reduction of the policyholder's outstanding mortgage. The idea behind this strategy is that you don't need as much life insurance if you have less mortgage debt. However, although the premiums are smaller than term insurance, the premium payments remain constant even as the benefit declines.
Annual Renewable Term
As each year passes, the term insurance is renewed but for a higher premium since the policyholder is a year older. The benefit to annual renewable term insurance is that the coverage is guaranteed to be approved each year. However, it may not be the most cost-effective for everyone due to the increased costs over time.

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