As the name implies, Term life insurance provides coverage for a specified period of time, the term of the policy, which typically ranges from five to thirty years. It is possible to renew these policies but the premium is adjusted to take account of increased age and changes in health. Term life insurance policies pay out only on the death of the policyholder within the time period covered by the policy. Your policy is paid out only upon death within the prescribed period of time. These policies have generally lower premiums than other life insurance as there is no savings or investment element in the premiums paid.
Term life insurance policies do vary and you need to select the one that meets your specific needs. The most common type taken out is level term insurance. Here the benefit payable to the beneficiary on the death of the holder is set, and the premium instalments are fixed for the duration of the policy. These term life policies are often used to provide protection for families until their children reach a certain age, usually 18 or 21. They are also an affordable means of protection until such time as the holder is in a position to convert to a whole life or universal policy if that is their longer-term aim.
Decreasing term life insurance is generally sold with a fixed premium, but a decreasing level of death benefit as the policy approaches its cut off date. A common use of decreasing term insurance is to cover the cost of a remaining mortgage, with the benefit payable on the policy designed to decrease at the same rate as the outstanding balance on the mortgage. These types of policies are often taken out alongside whole and universal life policies, as part of a protection plan in which the whole or universal life policy is the core element. Your own needs and circumstances will influence your decision as to whether a decreasing term policy is appropriate for you.
Finding the right life insurance package can be a complex process as there are so many policy option variations and riders out there. Rates vary from company to company and state to state, and people have different requirements according to their circumstances. An experienced professional insurance agent can be a great help in assisting you find the best coverage at the best price for your specific needs.