Term life insurance is perhaps the simplest form of life insurance. It was developed to provide temporary life insurance protection on a limited budget. Since term insurance can be purchased in large amounts for a relatively small initial premium, it is well suited for short-range goals such as life insurance coverage to pay off a loan, or providing extra life insurance protection during the child-raising years.
Features of Term Life Insurance:
- Initial affordability
- Adjustable Premiums: Some term life insurance policies have adjustable premiums. This means that Insurance companies can raise or lower premiums at some point specified in the policy based on projected changes of investment earnings, mortality experience, persistency, and expenses. However, premiums may never be raised above the maximum premiums stated in the policy.
- Renewability: At the end of the time period of the policy you select, Insurance companies level term policies allow the policy holder to renew or continue the coverage for the same time period yp to certain mximum ages. With each renewal the preium will increase.
- Conversion: Generally every Term Policy is convertible. Before the end of the conversion period, which varies based on the type of policy, the policyholder has the right to switch the term policy for a Whole Life or Universal Life Insurance Policy, regardless of the insured’s current health.