Life insurance comes in many varieties and forms that are designed to fit your specific needs and, ultimately, help you protect your family. First, the basics: Term life insurance is “pure insurance.” It does not accumulate cash value (see our previous discussion on “Cash Value” for more info) and only lasts for a specific period of time. Let’s go over a few of the varieties:
1. Annual, Renewable Term Life Insurance. This type of term life insurance is characterized by low initial premiums that increase each and every year. This may work in the beginning but, over time, the premiums become so high that you’ll wind up dropping the policy.
2. Level Term Life Insurance. This tends to be the most efficient type of policy as both the premiums and the death benefit remain the same over the term of the policy. You can get polices that last for 5, 10, 15, 20, 25 and even 30 years.
3. Decreasing Term Life Insurance. This is typically sold to cover a large loan like a mortgage. This is not a fan-favorite simply because the premiums stay the same as your coverage goes down (as, presumably, your loan balance goes down too). Essentially, you’re paying the same for less and less. Not particularly economical.
My office can help you determine which type of life insurance policy is best for you. Go to: http://www.thriftytermquote.com/