Term life insurance is a temporary life insurance that covers only a relevant term or specific period. It only covers life. It normally covers 5, 10, 15 and 20 or up to 30 years. It builds no cash value and it pays only the risk of death for the duration of the term. If you buy a 20-year guaranteed term policy at age 30, you will be covered until age 50 as long as you pay the annual premium. If you pass away between age 30 and 50, your beneficiaries will receive the tax-free life insurance benefit. However if you live beyond 50 years, the term period expires, sometimes without payout, and you will have to drop the term policy or renew it.
Cheap term life insurance offers the best value and largest amount of coverage available in a life insurance with the least amount of premium dollars. It is the most inexpensive life insurance coverage in the market but also offers a relatively lower payout than in permanent or whole life insurance policies because the probability of a healthy person dying at an early is low. However, the older you are, the premium for the term life insurance progressively increases. If you are over 65 years old, the insurance companies will no longer offer you the term life insurance, instead they will provide the whole or permanent life insurance plans.
Here are the three types of term life insurance that you can choose from.
- 1. Annually Renewable Term Life Insurance
Risk of death becomes greater every year and so a term life insurance rate increases also annually. This is the least preferred cheap term life insurance. Every year on the anniversary date of your insured policy, you will pay the term insurance premium.
- 2. Guaranteed Level Term Life Insurance
The guaranteed level term life insurance is offered by most insurance companies. It is very inexpensive and offers relatively long term coverage. The premium does not change in a given period of 5, 10, 15, 20, 25 or 30 years. Most life insurances include a guarantee of level premiums but there are some policies that do not offer guarantees. Without it, the life insurance company can raise your life insurance rate anytime, even in the time in which you are expecting that your term life insurance premium will remain level.
- 3. Return of Premium Term Life Insurance
The return of premium term life insurance is the newest life insurance policy but it is more expensive compared to the regular term life insurance. The life insurance premium includes a guaranteed refund if when the term expires, the insured person is still alive. The premium still remains level and does not change in a given period. The terms for this are usually for 15, 20, 25 or 30 years. Some return of premium term life insurance offer cash surrender values if the insured person does not die within his term coverage. Want to review other articles on insurance? Please visit The Biz Hunter for additional information.