Types of Term Life Insurance
Term life insurance comes in a variety of forms to cover your insurance needs, including funeral costs, mortgage protection, extended coverage, and added benefits to an existing policy. Term life insurance riders are insurance products that can supply additional benefits, such as living benefits, to your life insurance policy. This enables you to mold your life insurance policy to fit your financial needs.
Level Term Life Insurance
Level term life insurance is the most common type of term life insurance. These policies provide a level death benefit and level premiums for the term period. Most level term policies are renewable, should you outlive the life of the policy, and convertible. Level term life insurance is usually less expensive than whole life policies. Premiums are determined during underwriting; your age and the amount of coverage you buy are factors, too.
Decreasing and Increasing Term Life Insurance
Decreasing term life insurance is typically used to cover important financial obligations, like a mortgage or car payments. It allows peace of mind for the insured person should they pass away before the debt is paid. Decreasing term life insurance premiums decrease along with your loan payments and the face amount until the loan reaches zero. Should you pass away during the term period, the remainder of the debt is covered.
Increasing term life insurance is the opposite of decreasing term: the premiums increase with the face amount of the policy. Increasing term policies are most commonly used to cover the cost of inflation as time progresses. It may also be used if you foresee needing more coverage in the future and do not wish to apply again or take another medical exam.
No-M edical-Exam Term Insurance
Permanent life insurance policies that do not require a medical exam are usually very expensive and typically purchased as a last resort. No- medical-exam term life insurance policies are less expensive, though rates are higher than a term policy with an exam. These types of policies are quick to get, but applicants usually have an age limit of up to 65.
Group Life Insurance
Usually a one-year term life insurance policy, group life insurance policies are most commonly used as a part of a workplace benefits package. Group life insurance covers a group of at least 10 people who are a “natural group” formed for reasons other than to purchase insurance. Natural groups include employee groups, association groups, and labor unions.
Accidental Death Term Rider
Most people attach an accidental death term rider to their policy to increase their coverage at an affordable price. An accidental death benefit rider is usually double or triple the face amount of the base policy. The additional amount will be paid to the beneficiaries if the insured dies due to an accident. These riders usually expire at age 60 or 65.
Living Benefit Riders
Living benefit riders include long-term care riders, critical illness riders, and accelerated death benefit riders. These riders provide a percentage of the death benefit to be paid out if you become critically ill, suffer from an event that leaves you with a disability, or require long-term care services, such as nursing home care. These riders may reach the term by a certain age.
Riders for Additional Insureds
Term life insurance riders are also used to cover the lives of additional insureds that you have an insurable interest in. These include a children’s term rider, which usually ends by the time the child becomes an adult. And a family term rider covers numerous family members, usually a spouse and children, each with an equal amount of coverage. A spousal rider may cover the life of a spouse.