What are the different types of term insurance?
- Do I need life insurance?
- What if my spouse is financially dependent on me?
- What types of insurance are there?
- What is whole life insurance?
- What is universal life insurance?
- What is variable life insurance?
- What is term life insurance?
- What are the different types of term insurance?
- How much will life insurance cost me?
- What's wrong with using insurance as an investment?
- How big should my life insurance policy be?
- How do I buy life insurance?
There are two kinds. There's "annual renewable term," which gives you one year of coverage at a time that you renew annually, and "level premium term," which you buy for a specific multiyear period - say, five, 10 or 20 years.
Annual renewable term usually has the lowest annual premium to start, but the premium rises as you age. If your main concern is keeping your initial costs down - for example, because you think your earnings will rise significantly in the future - consider going with annual renewable term.
Level premium term lets you lock in the premium for that period; the annual premium is guaranteed never to change, from the first year to the last. That can be a smart way to insulate you from any premium increases. It's like the peace of mind you get from a fixed-rate mortgage compared to an adjustable-rate one.
