What is Term Life Insurance?
The first thing that you need to do when you are considering a life insurance purchase is to ask yourself, “What is Term Life Insurance?” This product is a very basic one, however you need to know the in’s and out’s of this type of policy because there are definite differences. Term life insurance plans differ in lengths, coverage types, and convertability features. So lets address these items so that we can make sure that you know the answer to the common question of “What is Term Life Insurance”.
What is term life insurance? – Common Lengths and Guarantee types
Term Life Insurance is basically a plan that is in force for a set number of years. Most plans are guaranteed to last either 10, 15, 20, 25, or 30 years, although there are other lengths available from different life insurance companies. There are two types of term life insurance premiums, guaranteed and non guaranteed. When asking yourself, “what is term life insurance”, you need to understand that a guaranteed term is one where the premium will stay the same during the life of the policy. Non guaranteed plans are usually set for a number of years, but usually in the second half of the term, they may increase. As a result, the guaranteed level term plans are usually just a bit more expensive due to the guarantee.
What is term life insurance? – Convertibility features
Whether or not a policy is convertible, and to what age is a critical thing to understand when figuring out the what is term life insurance question. Convertibility is the option to change your policy from a term policy to some sort of permanent life insurance plan. This is very important because you may decide some time in the future that you would like life insurance for the long term, and with convertibility you can make this change without having to go through underwriting again. A convertibility option is very important if you have had a drastic change in health that may prevent you from being able to qualify for term life insurance again at some point in the future.
Most term life insurance plans are convertible until the either the end of the term, or age 75. But be aware that some policies have a shorter duration in which the policy can be converted. If this is important to you, be sure to find these details out before deciding to purchase from a particular life insurance company.
What is Term Life Insurance?- Other types of plans
There are a few other plans that you should be very aware of before you can truly earn your degree from the “What is Term Life Insurance” school! One of the most common plans that is a variation of a basic term life plan is known as return of premium term life insurance. Return of premium term is a type of policy where you get back every penny that you have paid in at the end of the term. For example, if you had a 30 year term life plan, paying a premium of $1000 a year, you would receive $30,000 at the end of the term. These types of plans are more expensive than ordinary term life policies due to this feature.
As you can see, there are some key variations to look for in term life insurance policies. By doing your homework before you buy, you should be able to find the right plan for your needs. If you have any questions, please contact us, but hopefully this article will help you to be able to answer the question, “What is term life insurance?”