Term Life Insurance
Life Insurance Coverage for a Designated Duration
Understanding Term Insurance
Term Life Insurance Advantages & Disadvantages
- Initially, premiums are lower than those for Permanent Life Insurance, allowing you to buy higher levels of coverage at a younger age when the need for protection often is greatest.
- It's good for covering specific needs that will disappear in time, such as mortgages, car loans, and other obligations.
- 20- and 30-year products can provide coverage as long as most people might need life insurance.
- Premiums for succeeding terms of coverage increase as you grow older, after the term selected expires.
- Coverage may terminate at the end of the term or may become too expensive to continue.
- Generally, the policy doesn't offer cash value or paid-up insurance.
Types of Term Life Insurance
Level term products are the most popular plans purchased today. The level term can be from 10 years to 30 years. The premium and death benefit are designed to stay level during the term of the contract.
Term Life premiums can be either guaranteed or not guaranteed. When purchasing a level term life insurance policy, be sure you are aware of the guaranteed premium period.
Once you have been approved, you must make the first payment to put the policy in force. The insurance company is obligated to keep the policy in force as long as you keep paying the premiums. You are not obligated to pay, but once you stop paying, the policy will lapse after a short grace period.
If you need insurance beyond the term of the policy, the premium rates increase and you will probably have to provide evidence of insurability at that time.