Affordable Term Life Insurance: Understanding Your Options
There are two basic type of insurances: permanent life insurance and term life insurance. Permanent life insurance gives coverage for the whole life of he insurance holder as long as there is no violation in the contractual obligations of the policy, like by failing to pay the premiums. besides giving financial compensation for the loss of life, a permanent life insurance policy can also be considered a form of investment which can be drawn upon during the life of the police holder.
Affordable term life insurance, or "pure insurance", differs from the more expensive permanent life insurance in that it only covers loss of life and does not have an investment component. Since term life insurance is not considered an investment vehicle, more coverage can be obtained by purchasing affordable term life insurance for the same amount of money.
Most term life insurance policies offer a benefit upon death for a specific period of time ranging from one year to thirty years. Some term life insurance policies instead provide coverage up until the covered party reaches a certain age between sixty five and ninety years old.
A periodic renewal is a requirement for the affordable term life insurance policy which makes it different from permanent life insurance and more akin to a car insurance where the coverage lapses if not renewed on a periodic basis. Affordable term life insurance is available in two basic types, "yearly renewable" and "level premium".
Yearly renewable policies offer coverage for one year at a time. The amount of the premium will not change during that time. However, once the policy is renewed, the premium will increase annually as the covered individual grows older. For the first few years, annually renewable insurance continues to be the most affordable. However, after the first few years, the premiums could increase drastically.
There are various types of life insurance policies. One type is the level premium policy, in which the policy holder can often get the most value for their dollar. This advantage is due to the fact that the holder pays the same premium for the entire term of the policy. In general, the policies that have the lengthier terms also have premiums that remain the same.
But some term life insurance policies that have longer terms assess escalating premiums, often in increments of five to ten years. Before you buy life insurance of any kind, it's smart to review carefully the insurance rates as opposed to the value of death benefits.
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Published September 25th, 2008
