Life Insurance
Term Life
Term Life
Term life insurance is the more common type of coverage and is usually the most affordable. Upon the death of the insured, it pays a tax-free, lump sum. The coverage is for a fixed renewable time frame of 5, 10, 15, 20 or 30 years. Term policies only provide guaranteed coverage to a specific age, usually between 70 and 80.
As you can tell, life insurance is a solution for many financial situations:
Premiums for term insurance, remain fixed for the length of the policy. They are also generally less expensive. The policy is guaranteed renewable no matter what the health status of the insured is. However, it is important to realize that the premiums can increase at renewal. This can sometimes be rather expensive. If the policy has a provision to convert to a permanent insurance coverage, you can do so without a medical exam, up to a specified age limit.
When you consider that term insurance ends at a designated age plus the higher renewal rates, term insurance is generally considered best for short-term needs of 20 years or less. For longer term needs, or for estate planning purposes, guaranteed insurance coverage is preferred.