Term Life is the simplest type of insurance, providing death benefit only. There is usually no cash value or savings component. Premiums may be renewable at varying rates on a yearly or longer basis, or level for the length of the policy.

Some factors to bear in mind

If you wish to maintain the same amount of coverage year to year and purchase a yearly renewable term policy, expect the premium to increase each year. If you prefer a level-term policy, your premium will be a constant amount for a set period of time - usually 10 to 20 years. However, it will generally be higher than for a yearly renewable term policy in the initial years of the coverage period and lower in the later years. (For more details, see below.)

When to Use Term Life Insurance?

To cover short-term needs — such as a mortgage period, to ensure funds will be there to pay off the mortgage should you die. To address large life insurance needs - where the cost of providing the desired coverage through other, more sophisticated, types of policies may be unmanageable.

The Basic Types of Term Life Insurance

Yearly Renewable Term (YRT)

As implied, every year, your premium increases, but the amount of coverage - the death benefit - remains the same. The reason is that as you age, so does your mortality rate, but there is no investment or savings element to possibly mitigate the cost. By the same token, the absence of a savings element explains why the premiums are generally lower than for any other form of insurance; you pay purely for protection. YRT usually becomes prohibitively expensive at older ages.

Level-Premium Term

The premiums remain level for a specified period — usually 5, 10, 15 or more years. At the end of the level premium period, your premiums will increase — either for a one-year period, or for another specified duration. At that point, you may have to re-qualify for coverage by providing proof of eligibility — an important factor to consider in deciding which policy is right for you.

Decreasing Term

With this policy, your death benefit decreases every year, but the premium remains level. In effect, you pay less for more protection in the early years, when you may be cash-short, and more in later years, when cash reserves may be greater. It's the form most often used to help cover a mortgage, because the decrease in the death benefit roughly parallels the reduction in the outstanding mortgage. A wide range of protection periods is available.

Please contact us at life@buyhealthplan.com to learn more and acquire Term Life Insurance.