Term Life Insurance

Term life insurance offers a coverage period generally ranging from ten to thirty years. You pay a fixed premium during this time, and if you die, death proceeds are paid in a tax-free lump-sum to the designated beneficiary(s). As coverage is only for a fixed period, term life insurance is usually the least expensive type of life insurance. Furthermore, term insurance does not accumulate cash value. Cash value is the savings portion in a permanent life insurance policy.

Example: Let’s say you purchase a $500,000 policy for a coverage period of twenty years. If you pass away during this period, $500,000 (the death benefit) is paid out to the named beneficiary(s) on the policy. If you are still living after twenty years, the life insurance policy expires. At this point, you have the option to either renew the policy or let the policy expire. If you do renew the policy, the premium will be higher as you are older and most likely have additional risk factors.

Level Term Life Insurance

Level term life insurance provides the policy owner with level premiums throughout the life of the policy. This makes it very simple to budget for in your fiscal planning. So, if you’re paying $80 per month for a 20 year term, then you’ll still be paying $80 per month 20 years from now. Keep in mind that the longer the coverage period, the higher the premiums will be. At the end of the coverage period, you can renew the policy or simply let it expire.

Return of Premium Term Life Insurance

Return of Premium (ROP) term life insurance can be considered a blend between term insurance and permanent life insurance. ROP term life policies offer the policy owner a partial or complete return of the premiums paid. The premiums for ROP term life insurance are higher than for those of regular term life insurance. The extra amounts paid are allocated to an investment account. The investment account premiums are paid out in a single lump-sum only if the policy owner has not passed away at the end of the coverage period.

Usually return of premium term life insurance is suited for healthier younger people who think that they will outlive the coverage period. This allows them the dual benefit of having insurance coverage, coupled with the strong likelihood of receiving a return of premiums. The return of premium proceeds can be used as the policy owner sees fit.

Annual Renewable Term Life Insurance

These life insurance policies have premiums that increase each year. Every year of your chosen coverage period, you will have to renew the policy at an increased premium. Although, premiums will start off low initially, the yearly increase could become a financial burden down the line. In addition, these policies are harder to budget for since the annual increases are not fixed.

Decreasing Term Life Insurance

As the name implies, the proceeds paid out for a decreasing term life insurance policy decreases over the coverage period. The premiums are fixed, but the coverage declines over the years. Depending on the particular life insurance company, decreasing term life policies’ coverage can decrease either monthly or on an annual basis. Generally speaking, as we age our needs for life insurance coverage decline. Therefore, decreasing term life insurance is often suited for paying off expenses that also decrease over time, namely mortgages, school tuition, debts, etc. If you have these kinds of expenses then you should consider decreasing term life insurance.

As with all term life insurance policies, there is no cash component. Therefore, your premium payments are strictly to pay for the coverage period. If you die before the end of the policy, your named beneficiary(s) will be paid in a single tax-free lump-sum. If you are still living at the end of the term, you can either let the policy expire or renew.

10 Year Term Life Insurance

A 10 year term life insurance policy is inexpensive and usually well suited for those under 60. This 10 year term life policy offers the policy owner the security that even if they are not there, that dependent family members will be taken care of. Death benefits are paid tax-free and paid out in a one lump-sum. These proceeds can be used by family members to provide income, pay off debts, mortgages, etc.

During the 10 years, you will pay the same fixed rate premium. In addition, some life insurance companies allow you to convert the 10 year term life policy into permanent life insurance. Lastly, at the end of the policy’s term, you will be given the option to either renew or to let the policy lapse.

20 Year Term Life Insurance

20 year term life insurance provides affordable coverage, while still offering you long-term security. These 20 year term life policies are generally suited for those adults under the age of 50. Those that fit in this age range usually have heavy financial responsibilities. Term life insurance provides you with the security that no matter what your loved ones will be provided for. If you pass away during the 20 year duration, the life insurance proceeds can be used to pay off your family’s mortgage, college expenses, other debts, etc.

With term life insurance there is no cash value component. You simply pay the premiums and are covered only for the length of the term. If your needs change in the future, many life insurance company’s term policies can be converted into permanent ones. Term life insurance is very flexible and can be viewed as a temporary instrument that offers excellent supplemental coverage. Overall, purchasing term life insurance is a sound investment for your family’s future.

30 Year Term Life Insurance

Term life insurance policies generally range from 10 to 30 years. A 30 year term life insurance policy may be an excellent option if you want to have the peace of mind that comes with long term protection. In addition, this kind of insurance has the lowest premium rates. If you pass away during the 30 year period, death benefits will be paid to your beneficiary(s). If you are still living at the end of the 30 year period, you will have the option to renew your policy or let it expire.

As with any kind of term insurance, there is no cash value that accumulates. Term insurance is best suited for protecting against risks and obligations that are more temporary in nature. In addition, those who wish to have coverage, but are on a limited budget will also find term life insurance a good fit. No matter what, buying term life insurance is a good investment for you and the ones that you love.

Child Life Insurance

Often parents or grandparents will purchase child life insurance. Child life insurance is very inexpensive as the chance of the child passing away during the coverage period is minimal. By buying life insurance for them now, you are locking in the lowest possible premiums. Furthermore, child life insurance policies accumulate cash value. This savings component can be invested and grows on a tax-deferred basis.

Annuity Life Insurance

Annuity life insurance is a type of life insurance policy which provides for a series of future payments to the policyholder. The life insurance company issues the policy for a known sum with a net present value. However, the duration of the payment stream is unknown as it is usually based upon the life expectancy of the policyholder.

Get a free life insurance quote.