Term Life Plans
Term life insurance is a type of life insurance that lasts for a specified term, usually between five and thirty years, and provides a death benefit if the policyholder dies within the given term of the policy. The death benefit will be provided to the policyholder’s chosen beneficiaries. If the term expires before the policyholder passes, then the policy can be renewed for another term, be converted into permanent coverage, or terminated.
Types of Term Life
There are three types of term life insurance:
- Level Term: Level term policies, also known as level-premium, provide coverage anywhere from ten to thirty years, with a fixed premium and death benefit. However, the premium for this policy is more expensive than the yearly renewable term policy.
- Yearly Renewable Term: There is no specified term for this particular policy, but it can be renewed each year as it is a one-year term policy. The premiums are not fixed; as the policyholder ages, the premium increases.
- Decreasing Term: These policies have a fixed premium, but the death benefit decreases each year. These policies are typically used with a mortgage to match the coverage of the home loan and its declining principal.