Term life insurance provides temporary coverage with relatively low premium costs and protection for a specific period, such as 5, 10, or 20 years. It also could extend up to a specified attained age, like “Term to age 65.” However, it doesn’t have a cash or loan value; its sole purpose is to offer life insurance protection only.
Most common types of term insurance:
- Level Term: Specified level term, the death benefit remains level for the duration of the term, such as 5,10,15, and 20 years. Used for short term obligations. Can be issued as a single policy or added to a whole life policy as a rider.
- Decreasing Term: The death benefit decreases gradually but premiums remain level. This form of term is ideal for mortgage protection and can be issued as a single policy or as a rider on a whole life policy.
- Increasing Term: Not as commonly used but can be used for increasing cost factors for business or personal use.
Special Features
Not all term policies have the following special features, usually designed in the policy, and may cost more in premiums.
- Renewable Term: A benefit that will renew the policy on a renewal date without evidence of insurability. The policy may be annual, 5, 10, or 20 years renewable term. Your premiums increase at the beginning of each renewal period and are based on your attained age.
- Convertible Term: The right to convert the existing term policy to a permanent whole life policy without evidence of insurability during the conversion period. The premium can be based on attained age or issue age. The premium will be higher than the original policy and will require back premiums plus interest since the permanent policy will provide cash value and coverage that can last to age 100.
At Cole Insurance and Senior Solutions we can educate you on how term life insurance can be used in meeting your specific needs and goals in life.