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Term Life Insurance

Additional Information

Once  you have determined that you need life insurance, and calculated how  much coverage you require, you will have to choose between several types  of life insurance policies. There are two very different types of life  insurance contracts -- term and permanent.

Term Insurance Overview
Term  life insurance is often referred to as "pure insurance" because it  involves only the payment of a premium in exchange for a promise to pay a  death benefit in the event of your death while the contract is still in  force.

Term life insurance provides protection for  a specified maximum period of time and is usually renewable at the end  of each period at progressively higher premiums. As you get older, your  risk of dying increases, so the cost of term insurance goes up. Term  insurance carries no cash value element, making it less expensive than  permanent alternatives.

Annual Renewable Term

Annually  renewable term (sometimes called Yearly renewable term, YRT, ART) is an  example of a term insurance policy which has a constant face value and  premiums that are adjusted upwards each year to reflect the increasing  probability of your death in any given year.

Decreasing Term Insurance

Decreasing  term insurance refers to a type of annual renewable term life insurance  policy with a decreasing death benefit (face amount) and level  premiums. Decreasing term is ideal for insuring a liability that is  gradually being paid off, like a home mortgage.

Five, 10, 15, 20 and 30 Year Level Term

If  you prefer, you may select a "level term" policy which guarantees you a  level premium for a number of years (usually 5, 10, 15, 20 or 30) and a  level death benefit for the same period.

The  longer the guaranteed term, the greater the initial premium, but the  longer the premium stays fixed. In most cases, if you know you will need  your term insurance for a long period of time, a level term policy will  prove less costly than an annual renewable term policy.

Permanent Insurance Overview

As  the name implies, permanent (cash value) insurance is best suited for  the individual with a long term (often indefinite) need. A permanent  policy is really a combination of "pure insurance" and an investment  element. Premiums are considerably higher than term rates in the  beginning years, and may include an increasing death benefit, a "cash  value" associated with the policy, and tax-advantaged borrowing  privileges against your cash value.

Material  discussed is meant for general illustration and/or informational  purposes only and it is not to be construed as tax, legal, or investment  advice. Although the information has been gathered from sources  believed to be reliable, please note that individual situations can vary  therefore, the information should be relied upon when coordinated with  individual professional advice.This is a long form text area designed for your content that you can fill up with as many words as your heart desires. You can write articles, long mission statements, company policies, executive profiles, company awards/distinctions, office locations, shareholder reports, whitepapers, media mentions and other pieces of content that don’t fit into a shorter, more succinct space.


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