- Much more affordable.
- Higher coverage right when you need it most.
- You just want coverage till the kids grow up, your beneficiary reaches retirement age, and the mortgage is paid off.
Here are the six main ways people try to meet these kinds of goals with term life:
1. Level Term
The most common type of term life by far is “level term.” This means that you are guaranteed the same premium for the life of the policy, be that 1 year or 20 years, and your policy can’t be canceled by the insurer unless you fail to pay the premiums (which are usually very affordable))
Oftentimes, you have the option to renew your policy after it expires, but this isn’t guaranteed. And note that the longer the term, the higher the premiums since you will be older (a higher risk) in that case before the policy’s term ends.
2. Renewable Term
Although it’s possible to renew most term life policies, you have to get a specifically “renewable” policy to guarantee the right to renew it without having to take a new medical exam to qualify.
Your premiums will go up when you renew, however, since you will be older. And if your health has deteriorated, that can also impact the new premium levels.
3. Convertible Term
A convertible term life policy is one that not only allows but guarantees the ability to convert over to whole life. This usually can be done anytime before the term ends and before the age of 65.
Since whole life costs more, you will still have to pay higher premiums if you convert, but at least you won’t need to go through a new medical exam or underwriting process.
There really isn’t much to say about this policy type except what’s obvious from its very name: it guarantees you the right to renew the term policy for another round OR to convert it to a whole life policy. This is clearly a very flexible policy.
5. Decreasing Term
Sometimes called “mortgage insurance” because people buy it to cover the mortgage if they die before it’s paid off, decreasing term has a death benefit that decreases year by year throughout the term.
The premiums stay the same throughout, and they are somewhat lower because your benefit will decrease.
6. Increasing Term
Increasing term features both an increasing death benefit and a correspondingly increasing premium. You get the highest cover when you’re older and at the highest risk, but that’s also when you have to pay the most each month.
If you have any questions about term life insurance or whole life, do not hesitate to contact Flagler County (FL) Insurance Agency today! We can explain each of these 12 types of life insurance, and more, to you in greater detail and give you a free, no obligation, and highly competitive quote on your desired policy!