If you’re looking for simplicity in life insurance, look no further than term life insurance.
Term life insurance is often referred to as the most simple option when it comes to life insurance. As the name implies, it’s insurance for a term – a time period as short as a year or as long as 20 or 30 years. And, unlike permanent life insurance, it serves one straightforward purpose: to provide a death benefit should you happen to die during the term of your policy.
Unlike permanent life insurance – which combines insurance with an investment component – your term life premium is devoted to life coverage only. For younger people in good health, that means you can select a higher death benefit with a lower premium.
So if you’re young and just starting a family, term insurance provides a relatively inexpensive way to secure the coverage you need to prevent a financial catastrophe for your family, who would assume financial obligations such as a mortgage and vehicle payments in the event of your death.
Forms of term life insurance coverage:
Annual renewable term life (ART) is a policy which designates that the policy holder will be able to renew the policy annually for a set period of time, which may be as long as 30 years. With these policies, premiums are adjusted higher with each annual renewal, based on the age of the policy holder.
Guaranteed level premium term life insurance allows policy holders to lock in a guaranteed premium for a set period of time – 5, 10, 15, 20 years or more. The guaranteed level protects policy holders from increases due to inflation or from higher premiums that might otherwise result from changes in the policy holder’s health.
Decreasing term policies offer a decreasing death benefit over time, giving policy holders more coverage when they’re just starting out and less coverage as they accumulate savings and other assets. The closer they get to retirement, the less coverage the policy holders need to ensure the financial security of their beneficiaries.