What are the Different Types of Term Life Insurance?
There are a few basic types of term life insurance available. Among these are Level Term, Decreasing Term and Annual Renewable Term.
Here is an overview of each type of term life insurance:
- Level Term – Provides term insurance for a specific number of years – usually 10, 15, 20 or 30 years. Your premiums and coverage amount remain the same each year for the entire term or period of your policy. Level term insurance is the most popular type of term life insurance purchased by consumers today.
- Decreasing Term – Provides you with coverage that decreases each year, but the premium remains the same each year. So, although you are paying the same amount, your policy death benefit gets lower with each passing year.
- Annual Renewable Term – Provides a one year term life insurance policy which you can choose to renew each year if you meet the conditions required by the insurance company. This type of policy may require an increase in premium each year.
Many individuals, couples and families choose Level Term Life Insurance for 5, 10, 15, 20 or 30 years, because it meets their financial needs, and the premium and coverage amount remain the same throughout the period of the policy.
Also, level term life insurance provides the maximum amount of protection at the lowest premiums.
Next Tutorial - How much term life insurance do I need?
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