Terms & Conditions | Privacy Policy

Term life insurance is another classification of life insurance and as the name suggests it is a life insurance policy over a fixed term, maybe five, ten or fifteen years. The main advantage of term life insurance is that if it is taken out when one is young, it is a way of getting a cheap life insurance policy quote. The reasoning behind that is that you are young and healthy and the risk of your dying over the short term is not that great. One of the distinct advantages it is the only classification of life insurance that can be taken out for a year. The downside of term life insurance is that the premiums go up over the period for which you are insured. However term life insurance can be of a real benefit to someone in their twenties because the risk of death is relatively low.

The primary use for term life insurance is that its flexibility means that it can be used as an add on to a permanent life insurance policy. That means that it can be a crucial way of insuring for the short term against short term contingencies. These short term contingencies could be the term of a child’s education or a mortgage, or a car loan. In these instances the term life insurance can protect your dependents against your sudden death. Although the premiums of term life insurance may increase they are considered by most financial advisors to be a form of cheap life insurance. In some cases cheap life insurance is considered to be an inferior type of life insurance, but in the case of term life insurance it is possible to save towards the time when the life insurance premiums will increase. The savings should be sufficient for you to save towards another full time life insurance policy. They are also an advantage to the young because often you are not paying for dependents.

However the concept of cheap life insurance can still blow up in your face, because the price of the annual rate will rise in term life insurance and you cannot be certain that you will be able to meet the commitment at the time that they incur. Another disadvantage is that you cannot extend a fixed term life insurance policy, and your protection is only for the term. When it expires you are left with the option of taking out another term life insurance, that will be more expensive as you have aged in the period; or taking out a full life insurance policy.

Sub - Classifications of Term Life Insurance

Level Term Life Insurance

The premiums for this type of term life insurance do not increase with either age or time; they are averaged out and levied at an equal rate. The advantages to level term life insurance is that your financial planning is easier, you are aware of the cost of the premiums for the whole term at the outset. The disadvantage is that you still pay the increase, as it is taken into the equation, and you pay the increase from day one.

Increasing and Decreasing Term Life Insurance

With this type of term life insurance you have an added option to increase or decrease the amount. If you choose not to exercise the option the policy is normally a level term life insurance. The advantage of this type of life insurance policy is that it takes some of the pressure off financial planning if unexpected events happen. Increasing and Decreasing Term Life Insurance allows you to cope with unexpected financial pressures such as redundancy, or an unexpected pregnancy, but it also allows you to pay a higher premium when times are good and have more financial leeway at a later date.

Renewable Term Life Insurance Policy

A Renewable term life insurance policy does what it says on the tin, it can be renewed beyond the initial policy date. The advantage is that it overcomes the disadvantage of the short term protection of a term life insurance policy. The disadvantage of a renewable term life insurance policy is that the premiums increase as they would normal over the life of a fixed term insurance policy.

Convertible Term Insurance

The insured can exercise an option to convert the term insurance into other long term life insurance policies. The advantage of this can be considerable; it removes the short term limitations of this type of policy. If the insured needs permanent insurance for any reason, the protection for which he paid for and still has to pay for is not lost, but converted into a more suitable policy. The convertible life term insurance offers greater flexibility as your life choices change.

Group Term Insurance

Group term life insurance is usually taken out by an employer, who is responsible for the premiums, which will later be deducted from your monthly salary. They generally work out cheaper as the company can claim a discount for taking out a large amount of life insurance policies.