Q: How long do term life insurance policies last?
A: Term policies are typically issue 10 year term, 20 year term or 30 year term policies. As the term of the policy increases it tend to take on more of the characteristics of permanent life policies. In fact, level premium term insurance to age 100 is, by definition, ordinary whole life insurance.
Q: What is a “renewable” term policy?
A:Term policies are either renewable or non-renewable. This means, for a small additional premium, the policy owner has the contractual right to continue the contract. If the policy is renewable, the policyholder may unconditionally renew the coverage for successive terms at higher premiums (appropriate for the given renewal age) merely by paying the indicated premium. No forms must be signed or evidence of good health must be given at each renewal period.
If the policy is non-renewable, at the end of the term of coverage the policyholder has no legal right to continue the insurance. This means the policy owner must apply for new insurance. If the insured’s health has deteriorated, he or she may no longer qualify for coverage, or coverage may be obtained only at a significantly higher rate.
Q: What is a convertable term life insurance policy?
A:This is one of the most important options a policyholder should consider in purchasing term life insurance. In return for a slightly higher premium, most renewable term life insurance policies give the policyholder a contractual right to exchange the term life insurance policy for permanent life insurance without evidence of insurability. Typically, the conversion privilege gives the policyholder an absolute contractual right to convert the term life insurance policy into permanent life insurance that builds cash value. The conversion privilege often expires after a specified number of years or after the insured reaches a certain age.
Q: What is level term life insurance?
A: As its name implies, level term life insurance means that the death benefit remains level throughout the selected term of coverage. Term policies may be issued with virtually any initial face amount (the amount payable at death). Generally, premiums for level term life insurance increase each time the contract is renewed even though the face amount remains the same.