Basically there are two kinds of life insurance policies: permanent life insurance and term life insurance. Permanent policies grant coverage for the life of the policy holder, as long as they make their payments on the premiums, and abide by other policy rules. Aside from monetary compensation upon death, a permanent life insurance policy is a kind of endowment, and can be drawn upon while the insured person is still alive.
Affordable term life insurance, or “pure insurance”, differs from the more expensive permanent life insurance in that it only covers loss of life and does not have an investment component. Since term life insurance is not considered an investment vehicle, more coverage can be obtained by purchasing affordable term life insurance for the same amount of money.
Most term life insurance policies offer a benefit upon death for a specific period of time ranging from one year to thirty years. Some term life insurance policies instead provide coverage up until the covered party reaches a certain age between sixty five and ninety years old.
Unlike permanent life insurance, affordable term life insurance policies have to be renewed periodically, or else the coverage will lapse, like car insurance would. The pay structure for affordable term life insurance is divided up into two essential kinds: “level premium” and “yearly renewable.”
Yearly renewable policies give you a year of insurance for the current year. The payment will remain the same during the year. But, if you sign up for the policy again, the payment will be higher depending how old the insured person is. During the first several years, yearly renewable policies stay reasonably priced. After this time, the price may go up much higher and be more expensive.
During the effective period of the policy, the premium on long-term life insurance policies doesn’t change. It’s also this way with policies that you must renew every year. Level premium policies are policies where the premium stays the same all throughout the policy’s term. With a more stable premium for a longer time, these policies usually give the highest level of coverage for the least amount of money.
But some term life insurance policies that have longer terms assess escalating premiums, often in increments of five to ten years. Before you buy life insurance of any kind, it’s smart to review carefully the insurance rates as opposed to the value of death benefits.
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