This is a bit risky, and while it can seem cheap at first - for about the first 5 years of your plan - after that the premiums will come out higher than if you’d opted for a level premium term life policy. A convertible life insurance policy is simply a term life insurance policy that can convert to a permanent life insurance policy. What’s Term Life Insurance At its core, term life insurance is protection against loss for a specific period. We know we sound like a broken record, but you should always get 10–12 times your income. Term life policies are ideal for people who want substantial coverage at low costs. We recommend buying a term policy that lasts 15–20 years. And believe us, you’ll fork out a lot because they’ll rack up your premium to double what it should be. Premiums associated with term life insurance tend to be a lot cheaper than those of permanent policies. Because most term life insurance policies expire before paying a death benefit, the overall risk to the insurer is lower than that of a permanent life policy. Insurance. As the name implies, term life insurance, also known as “term assurance” or “pure life insurance,” is a type of life insurance coverage that expires after a certain length of time, or “term.” Until its expiration date, the policy guarantees payment to a beneficiary (or beneficiaries) if the insured dies. With term life insurance, your coverage is valid for a specific period, known as a term. Term insurance can also be reviewed more regularly, which allows you to review your circumstances to ensure that you're not over- or under-insured. "What Are the Different Types of Permanent Life Insurance Policies?" How much life insurance do you need? Most of the Term Life insurance plans do not have investment or savings components. But understanding the cost of life insurance isn’t always easy. You can do that all yourself by following the Baby Steps and investing wisely. Term life insurance is a tool that you rent as long as you need it. Hence, the common phrase "buy term and invest the difference." What Is Term Life Insurance? So, if the policy is for a 30-year term at a guaranteed premium of $25 per month, that will never change for the entire life of the policy. What is term life insurance? What Are the Different Types of Permanent Life Insurance Policies? All rights reserved. If you have a “level term” type of plan (more on the types soon) then your premium rate will go up when you renew (as you’ll be older and more expensive to insure). The conversion rider should allow you to convert to any permanent policy the insurance company offers with no restrictions. The key difference being a term life policy expires after a certain ‘term’, usually a number of years or when you reach a certain age, whereas some life insurance products will remain active as long as you continue to pay your premiums on time. With term life insurance policies, you choose the benefit period that best suits your situation at the time. Term life insurance is just what its name suggests. Some of the key features include: Flexible levels of cover. Steve’s death benefit is $400,000 because we recommend getting coverage that’s 10–12 times your yearly income. Cost of Term Life Insurance. If you die after the term is over, the insurance company doesn’t pay. These premiums are usually paid regularly, normally monthly or annually. Single life means that the term plan will only provide cover for the life of the insured party who is generally the breadwinner of the family. 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