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Insurance
Term Life Insurance |
Term insurance is the
simplest form of life insurance. It's also the least expensive type of policy you can
purchase. You can buy term life insurance that lasts only one year or for a specific
amount of time -- say five, ten, or fifteen years. Many term policies let you convert to a
permanent policy when your period of coverage has ended -- without evidence of
insurability. This could be extremely useful if you experience health problems and want to
remain insured.
As long as you pay your premiums, you're covered. The insurance company pays a death
benefit to your beneficiaries if you die during the term of your policy. If you stop
paying the premiums, your coverage simply ends. Term life is a straighforward type of
insurance policy -- similar to homeowners or automobile insurance.
There are three types of term insurance to choose from:
1. Level Term
The premium stays level for a specific period -- five, ten or fifteen years. At the end of
each period, the premium increases dramatically. Level term costs more than ART during the
first few years, but is less expensive during the remaining years.
2. Annual Renewable Term (ART)
The coverage renews at the end of each year when the term is up. Your premiums increase
each year as you get older -- when your more likely to die -- but your death benefit stays
the same. Very inexpensive when you're young.
3. Decreasing Term
This type of insurance works just like ART with one exception. Instead of increasing
your premiums every year, your insurance company decreases your death benefit.
Next: Whole Life Insurance
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