Types of Term Life Insurance
Term life insurance is temporary insurance that provides coverage for a set number of years. Term insurance provides death benefit protection at a lower cost than permanent life insurance.
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Types
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There are generally two types of term life insurance: annual renewable term life insurance and level term life insurance. Annual renewable life insurance is the most basic form of term insurance, while level term life insurance offers guarantees on premium payments.
Features
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Annual renewable term life renews every year and offers guaranteed death benefits. Because of this, premiums constantly increase every year. The increase in premiums will cause annual renewable term to become more expensive over time. Level term life insurance offers the same guaranteed death benefits but with guaranteed level premiums.
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Significance
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Annual renewable term life insurance is best when you only need term life insurance for a relatively short period of time, say under five to 10 years. Level term life insurance is ideal when your life insurance needs are 10 to 30 years.
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