|
Term Life Insurance is one of the purest forms of life insurance
in the sense that it provides a level death benefit in exchange
for a premium.
Death benefits for term life insurance are traditionally level,
neither increasing nor decreasing over the term of the policy.
This is in contrast to mortgage life insurance where the death
benefit declines with your mortgage balance, or universal life
insurance where the death benefit may increase over time with
the investment portion of the contract.
Premiums are also normally level for the the term of the policy.
Term life policies are normally categorized by the duration that
premiums are projected to be level. Ten, twenty and thirty year
term polices are all common, with the premiums for the policy
being level for 10 years, 20 years, or 30 years
respectively.
While in most cases the face amount of the policy will be
guaranteed for the term, the premium may not be fully
guaranteed. For example while many ten year term policies will
also guarantee that the premiums will remain level for the full
ten years, in other cases companies will agree to guarantee the
premiums for only five years, after which time the premiums are
only projected to be guaranteed - but may be increased or
decreased by the company.
When shopping for level term life insurance policies, one should
also consider the renewal premiums available at the end of the
term. In the event that you are uninsurable at the end of the
term you may be forced to retain your current policy at which
point these renewal premiums will become very important. Some
companies will offer another level term period without
underwriting, others will provide a schedule of future premiums
that increase every year. These annually increasing renewals can
quickly become unaffordable leaving the uninsurable with a tough
choice - continue without insurance or pay the higher premiums
every year. A situation like this is one example of why even
informed consumers should deal directly with a knowledgeable
life insurance agent who can provide guidance on the vast array
of term life insurance products in the marketplace.
Term life insurance makes sense for consumers looking to provide
protection for mortgages, to maintain your family's standard of
living in the event of the death of a breadwinner, or for
shorter duration insurance needs.
|
Categories 
