How to Choose Term Life Insurance
No one wants to think about losing a loved one. But coping with such a devastating loss is hard enough without the added financial worries if that person was a significant contributor to the family’s income. Term life insurance can help. This type of life insurance is designed to provide coverage for a specific period of time – usually those years when your financial commitments are the greatest. So if your family loses you, they won’t lose everything you’ve been working so hard to provide – like a home, a quality of life, children’s education, and a future.
There are a variety of terms available with term life insurance products. The most common terms are five-year term insurance, 10-year term insurance, 20-year term insurance, and 30-year term insurance policies.
There are 6 types of term life insurance often available but pay attention always if you will be able to renew or convert into a whole Life Insurance Policy.
Renewable term life insurance policies automatically renew at the end of the term. For a 20-year term life insurance, the insurance would automatically renew in year 21 for another 20 years. The renewal may be subject to higher premiums. Many policyholders choose to shop around for life insurance quotes at the time of renewal, as the premiums are much higher than the last term (due to age factors).
Conversion term life insurance is a very important feature with current policies. Convertible term life insurance allows policyholders to swap their term policy for a permanent policy, up to a certain age. This option is a must-have, as you will not typically require a medical exam and you will be provided coverage. You never know what can happen down the road and if you developed an illness, this will be your best option to ensure protection for your family and not worry about the policy term expiring.
Guaranteed Level Term Life Insurance
Guaranteed level term life is the most common type of term life insurance. It is defined by yearly premiums that never increase during the life of the policy. The fact that the policy has a defined expiration is a clear drawback to this type of policy. Even though most policies have renewal clauses, these do not guarantee the ability to renew the policy. Whether or not renewal is available is dependent upon the wording of the policy.Level term life insurance policies, for the most part, last for 10, 20 or 30 years. The premiums will be higher each year for longer term policies.
Return of Premium Term Life Insurance
This type of term life insurance has a special stipulation that guarantees to refund the life insurance premiums when the term period ends, assuming that the person insured is still living. These policies are typically available in 15, 20 or 30 year terms. While being pricier than a typical term life insurance policy, it is much less expensive than a whole life insurance policy and has similar advantages.
Decreasing Term Life Insurance
Decreasing term insurance is designed to pay a lower claim as the policy ages. Basically, the death benefit decreases throughout the period of the plan. While this type of coverage may at first sound odd, it is meant to insure people who currently have greater financial responsibilities that will decrease over time such as a mortgage or other large debts.
Modified Term Life Insurance
A modified term life insurance policy refers to a policy that utilizes an alternative payment structure to a standard life insurance plan but offers the same protection. These policies may have premiums that increase over time or be structured like a decreasing term life insurance plan where the payments decrease over time. These policies may help you afford the coverage you need but require planning and careful consideration of your own personal situation.
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