One very common option today is the level term life insurance plan.
The word level is used because your premium amount remains the same (level) over a given period of time.This could be for ten, fifteen, twenty, or thirty years.
The insurer adjusts your premiums in order to make the plan feasible. The longer your term is the higher your premiums will be. This is known as ‘time value’ of money. It adds in the older and more expensive years to be insured directly into your premium. It is averaged out of course.
To Renew or Not to Renew?
Most term life policies come with renewal options. This enables you to renew your insurance at a “higher” guaranteed rate in your term period needs an extension. This is not always the case so it is wise to always read all the fine print in regard to renewals.
Most anyone who has had to purchase insurance has heard of ‘Universal Life‘ or ‘Whole Life‘ policies. Generally a level term insurance policy can be converted to one of these. This can prove beneficial under the right circumstances.
Converting rights do not always cover the entire length of the policy. It might be set at a specific number of years or to a specific age for the policyholder like age 70.
Purpose Of Term Policies
Term policies have been designed for meeting specific needs for specific periods of time. Level term life insurance while keeping a level premium as described above, also carries a level death benefit. The purpose for most of these policies is to help families protect themselves until their children are old enough to become independent and carry their own insurance. That is when these policies can be converted into Universal or Whole life policies to start the children off on their own.
Decreasing tem is another type of policy that is usually sold with a level premium. The difference here is that it carries a ‘decreasing’ death benefit. If you are familiar with ‘mortgage life insurance’ then you understand what this is. It is usually offered as a rider that works in conjunction with the Universal or Whole life policies.
Details To Look Into With Your Term Insurance
One of the main things you want to know about your level term life insurance is whether it is a ‘Guaranteed Level Term’ or a ‘Non-Guaranteed Level Term’. So many people purchase policies unaware of that very significant difference.
Always remember that ‘Guaranteed’ level term means your premiums and death benefit remain level (the same) throughout the life of your policy. Then you will have the option to renew without proving you are still insurable.
If your policy is a ‘Non-Guaranteed’ level term then your coverage is provided for a shorter time period. These work best for young adults and those with home mortgage obligations. Good for people with car loans and various other types of financial obligations as well.
The Best Way To Purchase Your Insurance
Today the world is full of options. Insurance is something that some people have a hard time grasping. The best thing to do before signing up for any policy is to get them explained and then grab some free quotes so you can compare prices and benefits.
Contact Us anytime for complete explanations and a free life insurance quote.