Understanding the Different Types of Term Life Insurance

Types of term life insurance include:

1. annual renewable term (may be convertible)2. level term (may be convertible)3.Decreasing term (may be convertible)4. Reentry term (may be convertible)5. Convertible term

1. Level term life insurance – This is the most common type of term life insurance and provides a fixed amount of coverage for a specific period of time, typically 10-30 years. The premium stays the same throughout the policy term and if the insured dies during the term, their beneficiaries receive the death benefit.

2. Decreasing term life insurance – In this type of term life insurance, the amount of coverage decreases over the length of the policy term. It is often used to cover a specific debt that decreases over time like a mortgage loan or credit card debt. The premium usually remains level throughout the term but the death benefit decreases.

3. Renewable term life insurance – This type of policy allows the policyholder to renew the coverage at the end of the policy term without going through another medical exam. The premiums may increase based on the age of the insured at the time of renewal.

4. Convertible term life insurance – This policy allows the policyholder to convert the policy to a permanent life insurance policy without having to go through a medical exam. This type of policy may have higher premiums than traditional term life insurance policies.

5. Return of premium term life insurance – This policy works by refunding the premiums paid if the insured outlives the policy term. This policy can be much more expensive than traditional term policies, but can be good for people who want to be sure they don’t pay premiums for insurance they may never use.

More Answers: