|
What
are the different types of term insurance policies?
- Renewable Term Insurance.
This policy allows you to renew coverage at the end of
the term without having to submit medical information.
The company renews your policy even if your health has
deteriorated. However, the premium rate will usually
rise with each renewal.
- Convertible Term Insurance.
You can convert your term coverage into a permanent
policy without providing evidence of insurability
(usually a medical exam). Premiums for convertible
policies are usually higher than for nonconvertible
policies. Once converted, the premiums for the permanent
coverage will be higher than those you are currently
paying for the term policy for the same death benefit.
However, the premiums for the permanent policy will now
remain the same while the term premiums will continue to
rise on renewal.
- Level Term Insurance.
These policies provide a fixed premium for a certain
number of years, usually 10 or 20 years, while the death
benefit remains unchanged. The advantage is that you
lock in a certain rate for the period of the policy. The
disadvantage is that rates will jump considerably if you
want to renew with another level policy.
- Decreasing Term Insurance.
The death benefit in this type of policy decreases over
its term. For example, you might start with $100,000 of
coverage and the amount of coverage would decrease by
$10,000 each year for 10 years. The premium will vary
over the term of the policy. This policy is no longer
sold very often.
|
|
