LEVEL TERM INSURANCE
Level term insurance provides coverage to a specified period running from 10 to 30 years. Both premium and death benefit are fixed. Since statisticians must record for the increasing costs of insurance over the life of the insurance adequacy, the premium is nearly higher than yearly renewable term life policy. This type of insurance face amount under diminishing term insurance lessens over the term of the contract. In this way, the death benefit paid to the beneficiary with the age of the contract term. However, the premium usually remains level each year. But, it can be lower later in the contract term. Most policyholders use decreasing term life policy to cover financial commitments that decline after some time. For example, a home loan.
RENEWABLE TERM INSURANCE
The renewable term has no specified term yet is renewable every year without requiring proof of insurability every year. Early on, premiums are low, but as the insured ages, premiums increment. There is no specified term, premiums can turn out to be prohibitively costly as people’s age, settling on the policy an unattractive decision for some. Death benefits are possibly paid out if the policyholder becomes deceased inside the contract year. In any case, premiums in the next renewal year are normally higher to reflect the policyholder’s older age. Renewable features can be significant, as they guarantee coverage stays in place during the key years regardless of health status.
CONVERTIBLE TERM INSURANCE
Convertible term insurance enables the policyholder to change over a term life insurance to a permanent insurance policy. Policies with conversion highlights are especially appropriate for policyholders with growing young families. They give affordable protection during the early years and the choice to change over to permanent insurance that will build cash values in later years. This conversion is permitted within a time frame or up to a specified age, as characterized in the contract. The insurance company will inspect the policyholder’s health status during the initial term insurance enlistment. However, no additional evidence of good health is required at the time a policyholder changes over to a permanent policy.