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Life Term Life Insurance - Term Life Insurance - What is Term Life Insurance?, Conditions of Life Term Insurance

level premiums time change

Term life insurance is the kind of life insurance which offers coverage at a fixed rate of payment for a certain period of time, or term. Whole life insurance generally covers an individual for his or her entire life, but term life insurance is only for a number of years, such as 20 or 30. Term life insurance is cheaper than whole life, but generally does not accumulate any cash value.

Conditions of Life Term Insurance

Many providers let you choose the period you want for your term life insurance. These can vary according to company. State Farm has term life insurance for five, ten, 20, and 30-year periods, while Met Life has 10, 15, 20, and 30 years terms, as well as a special one-year term. All terms may not be available in all states. For example, New York Life warns customers that their 20-year term insurance is not available in every state from its own website. Most companies will let you change coverage from term to permanent, although some have regulations as to when you can do so. A few insurance companies will allow you to change at any time, while others say the change must happen within a year or so of beginning coverage. When choosing a term policy, you should also check to see if you can renew after the term expires. Many policies will allow you to renew but will mandate higher premiums if you are over a certain age.

Level Life Term Insurance

Level life term insurance provides the same level of death protection for the entire period of the term. What you purchase at the beginning is what you will get over the years, regardless of inflation or other economic factors. The premiums for level life term, however, may change. Generally, they will also stay the same for the entire term, but some premiums may be level only for a certain time, and others may increase after a certain amount of time.

Decreasing Term Insurance

With decreasing term insurance, the death benefit amount decreases over the term. Premiums for this kind of insurance generally remain level, however. This kind of insurance may be right for people whose financial obligations decrease over time, such as people who have or will pay off a mortgage or small business loan over the years. Another option which is almost the opposite of this kind of insurance is annual renewable insurance, where the amount of the death benefit remains the same during the term; however, the premiums increase every year.

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