subject: Types of Term Life Insurance – Looking at the Different Types of Term Life Insurance [print this page] Types of Term Life Insurance Looking at the Different Types of Term Life Insurance
Many people are surprised at the fact there are multiple types of term life insurance. You need to understand these differences to make sure you get the right policy for you and your family. The most common type of term policy is the level term. This policy is the most straightforward of the term policies. You pay a fixed premium amount each month in return for a fixed amount of insurance over a given period of years. Once you sign onto the policy, nothing changes until the policy ends at the term closing or at the death of the named insured.
Another form of term life insurance is increasing or decreasing term policies. These policies most commonly come with steady premium payments over the life of the policy. The biggest difference between them and the level term policies is the amount of coverage that pays in the event of the named insured's demise. With an increasing term policy, the amount of coverage increases at a given rate over the life of the policy. That means it will pay more if the insured dies near the end of the policy instead of nearer to the beginning. The decreasing term policies act the exact opposite. They pay more at the beginning than they would at the end.
Some term life insurance policies allow modifications to the term policies. The renewable term policy allows the policyholder to renew the term policy at the term end without submitting any evidence about the named insured's health. The biggest drawback to this type of policy is the premiums often go up significantly after the renewal. Another type of term policy is the convertible term. This type of life insurance contains a proviso that the policyholder has the option to convert the term policy to a permanent policy at some point in time.
A final form of insurance is the group term policy. This type of insurance often comes through employers. Sometimes professional associations will offer this form of coverage to its members. Instead of an individual purchasing a single policy, the group offers coverage to several members at once. This leads to lower premiums for a higher amount of coverage. You need to know the different options in searching for term life insurance. You can use the help of an insurance professional to help you determine what policy will work best for you. And that should be a consideration in your financial planning.
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