Term life insurance provides coverage for a pre-defined period of time, or “term.” The amount of the premiums can be fixed and remain unchanged for the duration of the term. While the length of the term and other specifics vary, the premium you pay for in a term life policy will stay the same for as long as 30 years. Term life coverage tends to be less expensive than universal life coverage and is favored by consumers who know they want life insurance only for a specified period of time. Common durations for level term insurance include.
- 10-year term
- 15-year term
- 20-year term
- 30-year term
Term life insurance also gives policyholders the right to exchange their term policy, regardless of current health, for a permanent policy. This option is useful for those whose health has changed since initiation of their policy as it does not require an additional medical exam or other evidence of insurability.
However, bear in mind that converting a term policy to a type of permanent life insurance generally results in a higher monthly premium. Also, the amount of time allowed by carriers to convert policies is shorter than the duration of the term coverage, so be careful not to let a conversion deadline pass.