Comparing the Different Types of Term Life Insurance
There are five primary types of term life insurance, each one with its own advantages or intended uses. Choose the type of policy that best suits your needs. Remember that you can have as many term life insurance policies as you need, so it is not necessary to use the same type of policy for every eventuality you are trying to plan for.
Level Term - This is the most common type of policy. It keeps the premiums the same throughout the duration of the policy term. Most term life policies are based on 1-year increments, but it is possible to buy a term life insurance policy for any length of time you want to insure.
Increasing/Decreasing Term - This type of term life policy is variable, meaning that the value of the policy either increases or decreases over time. The premiums usually remain the same throughout the policy.
Renewable Term - This type of term life insurance is designed to be renewable at the end of the initial policy term. Keep in mind that renewing the policy will usually mean paying increased premiums with each renewal, because the odds of personal mortality increase over time.
Convertible Term - A convertible term life policy has the option of converting the policy to a permanent life policy during or at the end of the policy term. Conversion may require paying a lump conversion sum and generally mean paying higher premiums than you would if you had chosen a whole life policy to begin with.
Group Term - This type of policy is intended for groups, and is usually paid for in whole or part by an employer. The benefit of this type of policy is that it is less expensive than other term life policies, but the policy may also include restrictions that would not be faced if purchasing an individual policy.