Non-Guaranteed Term Life provides coverage only for a short time (usually a year) and is pure death benefit protection. The risk with term life is that your health might deteriorate and you could be unable to get another policy once the term is up. Premiums can also increase dramatically as you age, but term life insurance is usually a good choice for young people who can’t afford the higher expense of permanent insurance, or for people covering specific needs that will disappear in time, such as a car loan or a mortgage.
Annual Renewable Term Insurance offers a longer term, usually for 10, 20, or 30 years. By buying a longer term policy, your costs can be stretched out to avoid the annual increases found in non-guaranteed term life.
Convertible Term Insurance is like annual renewable term but it also offers conversion to a permanent policy in the future – when regular term premiums might become cost-prohibitive or if your health declines. Convertible term policies usually provide the maximum protection with the smallest amount of cash outlay required. This is a good choice especially for young people who are unable to afford the higher cost of permanent insurance right now but need maximum life insurance and also want to have the option of converting to permanent coverage in the future.
Why choose a Term Life Insurance policy?
- To get coverage at the least premium cost.
- To supplement existing insurance for a specific period of time (e.g. while your children are young).
- To protect your family.
- To help pay off your mortgage.
- To help pay off your debts.
- To provide educational funds.
- To take care of loved ones.
- To protect your business.
Advantages of term life insurance.
- Provides the largest immediate death benefit for your premium dollars.
- Provides death protection for a specific length of time.
- Premiums may be guaranteed for 5, 10, 15, 20 or 30 years.
- Some policies are convertible before the end of a “conversion period” to a whole life or universal life policy even if you are not in good health.