Term life insurance is life insurance that provides coverage for a fixed rate of payments for a limited period of time also know as the relevant term. When the relevant term expires, then the insurance company has the right to change the rate of premiums. At this point the policy holder either has to choose another type of insurance or get rid of life insurance all together. If the policy holder passes away during the life of the loan, then the beneficiary would receive the death benefit. This type of insurance is often the cheapest way to purchase a life insurance policy but does not offer much in the way of investments opportunities.
Term life insurance was the first type of life insurance. Term life insurance differs from other types of insurance because it is short term life insurance. It also does not offer the investment opportunities or increase in value over time. Once the term is up the only way it can be paid out is upon death.
Level Premium Term Life
With a level premium term life insurance policy the premium remains the same for the life of the policy. The premiums may start put low but increase as the age of the policy holder increases and the risk of death increases. Everything insurance companies do is based on the risk level of having to payout on an insurance policy. Unlike regular term life, this insurance policy is renewable after the term ends, at a higher premium.
This policy works well for those on a fixed income because the premiums stay the same. Even though term life is generally the cheapest life insurance. Level premium insurance can run higher then regular term life. Once the term has expired on the level premium policy, then the insurance company will reassess your risk level before insuring you again. If you have developed significant health problems since you first purchased the policy or if you have reached a high risk age bracket, then your premium amount could be significantly higher.