Term life insurance is a type of policy that provides benefits to the insured's beneficiaries within a set period of time. After the end of the term, you will either have to renew the policy or look for a whole life insurance plan to obtain coverage. There are numerous insurance carriers that have term policies and evaluating the companies' plans can help you make a smart investment choice.
Step 1
Use an online comparison engine to check the features of various term life insurance policies. If you are using an agent, he can give you pamphlets that have the data you will need to evaluate various plans. Otherwise, use a site like Intelliquote.com. The company provides quotes from well known carriers like AIG, American General and Prudential.
Step 2
Check the length of the term offered by the term life insurance policy. You can get term life policies for as short as five years to as long as thirty years. Many people like to meet short term goals when taking out a term life policy. For example, you may want to ensure coverage until your children finish college. Another scenario could be having term life coverage until you reach retirement.
Step 3
Determine the rate of the premiums you will pay toward your term life insurance policy. Term life insurance plans may have adjustable premiums. Within your policy, you will be given a maximum amount that the premium payment cannot exceed. State Farm is an example of a company with adjustable premiums for term coverage. However, other companies may allow you to pay a fixed rate that never changes for the length of the policy.
Step 4
Inquire about the conversion and renewability clauses. A conversion rule will determine whether or not you can convert the term life insurance policy to a whole life insurance policy at a later date. Once you convert to a whole life plan, you will be subject to a higher premium rate. At the conclusion of the term, your policy may or may not permit you to renew for another term. You will typically be given a maximum age that you can not renew beyond.
Tips and Warnings
- Although you can renew your policy at the end of the term, you will likely be subject to higher maximum premiums and need to sign a new contract.
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