About Term Life Insurance

By Insurance.com Posted : 04/08/2010

Term life insurance differs from whole life insurance - also called permanent life insurance - because it only lasts for a set period of time (the term), or until the insured person reaches a certain age. Because the insurance company's risk is limited to this specific term, term life is typically cheaper than whole life insurance. It's the best way to get the most coverage for the smallest price in life insurance. You can get a better understanding of the rates and options available to you by comparing multiple term life insurance quotes online.

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There are two main types of term life insurance: level term and decreasing term. In level term, the death benefit remains the same at all points in the term. In decreasing term, the death benefit decreases as the term progresses, usually on a yearly basis. Level term is overwhelmingly more popular.

Within the category of level term insurance, there are a few options. One is renewable term, in which the policy can continue for additional periods of terms (e.g., five years) even if your health or circumstances change. Generally, the renewability continues either for a set number of terms or until a certain age. Guaranteed renewability often adds to the cost of term life insurance, but can be important. The overall price and amount of coverage you get can matter more than the options you select, which is why taking a minute or two to get an instant online quote is so smart.

Guaranteed premium - either within the terms or across renewals of the term - is another option. It guarantees that the premium either will not increase, or will not increase above a certain level. Another option is convertibility, which allows the policy owner to convert the policy to a whole life policy - either at any time or during a certain period - often with part of the term premiums paid credited to the new permanent policy. Convertible term policies are often more expensive than standard term policies, but usually do not require health exams when converting.

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