The
Term Life Insurance policy offers coverage
for a specified term usually 1, 5, 10 and
20 years or to a specified age.
The most common term life policy is the
Level Term Life Insurance which provides
a death policy that remains the same over
the term of the policy. This type of coverage
is purchased for many reasons:
Provide coverage for a young family should
the primary income earner die prematurely
helps provide income and education costs
while the children are young.
Cover a period of time when liabilities
are high.
Level Term Life Insurance policies are renewable
and convertible which means they can be
renewed at the end of the period at a higher
premium rate (based on attained age) without
submitting to new medical evidence or converted
to a permanent product anytime during life
of the policy also without submitting to
new medical evidence.
Other common term policies
sold by banks and creditors is the Decreasing
Term Life Insurance which provides a death
benefit that decreases in amount of the
time of the policy. Since there is no value
at the end of the policy period you can
not renew or convert these policies. Decreasing
term tends to be a bit cheaper than the
corresponding Level Term Insurance.
What
advantages does the Level Term policy have
over the Decreasing Term for Mortgage Insurance?
Level Term can be transferred from one
house to another.
It is owned by the policyholder not the
bank or creditor.
Proceeds from policy can be used to pay
off the mortgage or not, its up to the
beneficiary.
Once the mortgage is paid off it can be
cancelled or renewed to provide protection
for your estate.
It is convertible to a permanent product
which also can provide protection for
the estate.
