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What are the 5 Most Common Types of Term Life Insurance?
Aug 28, 2013
Of all kinds of life insurance that we have today in the market, types of term insurance programs are considered to be the most affordable of all types of term insurance. With term life insurance you can’t expect that it would also have a cash value, unlike when it comes to whole life insurance that normally has it as its primary selling feature. If you are not aware what a cash value is, it is a feature usually found in whole life insurance where your policy does accumulate savings funds that you can later withdraw when needed. Term insurance is essentially considered as “pure” life insurance. Reason being that the monthly premiums you pay for go directly to settling of your insurance program and other than that there is nothing else.
What term life does is give you as a policyholder more Face Value coverage as opposed to the other kind of life insurance, that is for every “given” premium amount.
Basically there 5 major types of term life insurance today in the market, to name a few they are the Decreasing Term, Increasing Term and Level Term insurance. However, please note that the increasing term is available only as a “rider which means an added option you may or may opt to take. But for the sake of having a better understanding of these things, I’ll give a good explanation for these 5 now.
1.Deposit Term Insurance
It’s a 10 year renewable insurance program that necessitates you to initiate a security deposit upon purchase of this insurance. After the lapse of 10 years and you were able to maintain your insurance policy active, your insurance firm will return your entire deposited amount together with the appropriate interest earned.
2. Re-Entry Term Insurance – This is so far the cheapest type of term life insurance. By making use of what is known as “select rates”, you can buy yourself your won Re-Entry Term insurance program, which by far is considered by many people as more affordable as it comes with compared to the standard rates. Once this “term” of your insurance policy has lapsed, you may be necessitated to present your insurance firm a medical certificate signifying that you are still in the best of health just so you would still be offering the select rates. You can get this done by submitting yourself to a thorough physical exam. Otherwise you may just proceed to pay the original premium amounts you had on your original term insurance policy.
3. Renewable Term Insurance - By the time that the term of this policy has ended, you may renew it without being required to undergo a thorough physical exam. You don’t even need to submit yourself a medical document verifying that you are indeed well, free of any kind of illness and healthy just to become eligible again to be insured. As you age, you may still receive increases in your monthly premiums but it is not because your health is deteriorating as you age which many actually have the notion of. The “annual renewable” type falls under the Renewable Term life insurance, with its monthly premium set to increase on a yearly basis too. Aside from this example, there are a number of other types of Renewable Premium insurance and this includes the following: 5 year term, 10 year term and 20 year term.
4.The Non-Convertible/Non-Renewable –
With this kind of term insurance, it is set to lapse at the end of a given span of time. Say for example that you have a ten year term insurance program. The cost will be higher compared to a Re-Entry Term program; however it is going to be way more costly than a renewable term.
5.Convertible Term Insurance
You may hear some financial advisors refer to this term comes to what most people know as “conversion privilege”. What this signifies is that you have the prerogative to change your policy and convert it to another policy that comes with a higher amount of the monthly premium, which can either be Whole Life or Endowment. You may actually do this at any time that you please. Also the amount of premium that you’d be given would be in reference to your age at the time that you decided to have your conversion.