Term Life Insurance

Family Having Fun At Home TogetherTerm life insurance is a good fit for short-term needs or those that have a specific end point. Simply choose a cheap term life insurance policy duration to meet those needs—for example, to help ensure your family will be able to pay a 20-year mortgage, you can choose a 20-year term policy.

Renewable Term Life Insurance

“Renewability” allows a policyholder to renew or extend their term life policy for additional terms without medical examination. This is important to shoppers because it enables a policyholder to continue their insurance as they get older or find themselves in poorer health. Although they may eventually be outside a company’s criteria for underwriting policies, the insurer is required to renew the policy because it is guaranteed. Most term policies do not allow renewal after age 80.

Convertible Term Life Insurance

“Convertibility” simply means that the policy can be exchanged for permanent life insurance of equal value if the policyholder decides he wants a change. Typically this exchange requires neither underwriting nor a medical exam. This means that if you had a $50,000 convertible term policy, you could convert it into a $50,000 cash value policy without giving a health history.

This conversion would, however, increase premiums. Usually policyholders are permitted to convert term policies only until they turn 65, and the period during which conversion is possible is shorter than the period of coverage.

Being confused by all the different choices is normal, even inevitable, especially when you consider what is at stake. Everyone has unique needs and comfort levels; so when a friend tells you they have great term insurance and that you should get the same thing, remember, your ultimate decision will be based on your circumstance and not theirs.
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