David Huff is a proud United States Marine Corps Veteran. As a husband & father of two beautiful children David knows the importance of protecting them incase of unforeseen circumstances. He Strongly believes every American needs to be protected.

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3-1-2021 by 
5.00 of 2 votes

As one grows into adulthood and starts a family, they usually start becoming more and more concerned about their family’s long-term financial planning. This is where life insurance policies come in. Life insurance figures very commonly into many people’s financial planning as it provides security that is verified through a contract with a third-party insurance company.

Generally speaking, life insurance policies are divided into two distinct categories. These are Term and Permanent Life Insurance. Term insurance is designed to provide coverage for a set or limited amount of time, while permanent policies provide coverage for the full duration of a policy holder’s life.

Within these two categories are also sub-variants of each kind of insurance policy. In this article, we will be covering 4 different types of term insurance, outlining what they are, how they work, and what makes each one different from the others. If you are confused about which term insurance policy to opt for, then this article is surely for you!

1.   Level Term Insurance

People are normally aware of the two most commonly invested in term insurance policies. These are Level and Decreasing term policies, and they are different from one another in an important way.

Level Term Insurance is designed such that the death benefit remains the same for the entire term of the insurance policy. This means that whether the policyholder dies soon after the contract is signed or right before their policy’s term is over; the death benefit their beneficiaries will receive will be the same.

2.   Decreasing Term Insurance

On the other hand, decreasing term insurance is designed in such a way that the death benefit will consistently decrease over the life of the term stated in the policy. This means that if the policyholder dies a premature death, the death benefit will be relatively larger than if they died at an older age. 

Decreasing term life insurance is normally opted for by those who wish to cover a specific debt in the event of their premature passing.

3.   Renewable Term Insurance

Term insurance is generally designed to provide the policyholder with coverage for a set and limited term. However, some term insurance policies are renewable and provide the policyholder the option to renew the policy once their term is complete.

However, for those who opt for renewable term insurance, keep in mind that the new premium will be adjusted according to your current age, and more importantly, your current physical health. In other words, those who the insurance company deems are more likely to die sooner rather than later will have to pay relatively higher premiums.

4.   Convertible Term Life Insurance

Many term life insurance policies come with the option of being able to be converted from a term insurance policy to a permanent one. If you opt for a convertible term life policy, you will have this conversion option available to you throughout the life of your term.

To Sum Up

Term life insurance is an affordable option for many people who wish to plan for the long-term financial security of their loved ones. In order to choose from the different types of term insurance, you will need to assess your family’s financial needs, perhaps with the aid of a financial advisor.