Posted: 8 Aug '11
Types of Term Life Insurance
Mortgage Term Life; this type of insurance is purchased to cover a mortgage. The death benefit decreases over time along the same curve that your mortgage pays down. The death benefit is used to pay off the mortgage leaving the family with a clear title to a home but no extra cash for expenses or living costs. The premiums on this type to coverage stay about level or increase a bit as you get older.
Yearly Renewable Term Life; the death benefit will always stay level. The premiums adjust yearly as the title implies so that as you get older the premiums increase. These plans could continue to increase all the way to age 75. After age 75 the coverage will terminate. With other plans after 20 years the premiums change from yearly renewable Term to 5 year renewable term where the premiums only increase every 5 years to age 75.
Term 5, 10, 20 or 30; the death benefit in all four of these plans will stay level to age 80. After age 80 the coverage will terminate. The premiums stay level for the different terms, either 5, 10, 20 or 30 years. You will find that the longer the term the greater the increase in premiums for the next term. For example with Term 10, the premiums will almost double for the second 10 year term. The increases are a little smaller for females.
Term Life to 100; the death benefit stays level to age 100. This death benefit will not terminate until you do. The premiums also stay level to age 100.
In the first year Yearly Renewable Term is the least expensive. As the term increase from 5 to 10 to 20, etc the premiums start at a higher level. Usually after about 20 or 30 years depending on the company the premiums all reach about the level regardless of what plan you start with.
A medical is required to get the coverage issued but after issue no medical is required for the renewal.
Talking to an experienced agent will help you determine the plan that is best for your situation.