What is a Coverage Term for Life Insurance?
The term (duration) of coverage for life insurance depends on the type of life insurance.
Permanent life insurance has no coverage term, it provides lifetime protection.
Whereas, term insurance is temporary providing coverage for the duration of your Policy Term.
How Long Can Coverage Terms for Term Insurance Last?
Usually, term policies offer coverage lasting for a duration from 10 to 30 years.
What are The Options for Coverage Terms?
You may be able to choose a policy duration of 10, 15, 20, 25 or 30 years of coverage.
What is the Maximum Duration of Term Coverage?
That depends on your age. Most life insurers offer term life policies lasting for a maximum of thirty years.
However, your age will impact the maximum duration of coverage available.
For example, a thirty year old may be able to purchase a 30 year term policy. While a 70 year old may be limited to a maximum term of 10 or 15 years of coverage.
How Much Does Term Life Coverage Cost?
The premium (charge for life insurance) is determined by underwriting your risk factors for coverage. The most common risk factors considered in developing a rate for life insurance include the following:
Your risk factors are analyzed to determine your life expectancy – how long you are expected to live.
Your rate is determined based on your life expectancy compared to the average or standard risk for coverage.
Your rate is then multiplied by the amount of life insurance you need to develop your annual premium, or cost of life insurance per year.
For example, if your rate is $3 per thousand of insurance and you need $150,000 of life insurance, your annual premium would be $450 ($3 X $150).
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What is Term Life Insurance Coverage?
Term life insurance is life insurance designed to provide financial security for your family in the event of your death. It provides coverage on your life for a period of time based on the term length you select — typically a duration of 10, 15, 20, or 30 years.
Term insurance offers level premiums for a specific period of time — generally 10, 20, or 30 years. The initial level premium tends to be much lower than comparable permanent life insurance plans. And proceeds may help your family financially if the unexpected happens when they still have major expenses; such as, a mortgage, college tuition, auto loan, or other substantial monthly bills.
The shorter the duration of your policy term, the less expensive term coverage will be. While premiums remain level for the entire term period, they will rise if you decide to renew (continue) your life insurance coverage beyond the level premium initial period.
What are the Benefits of Term Insurance Coverage?
Lower Pricing
Term life policies only cover you for a set amount of time, which lowers your rate. If you are a non-smoker in your 30’s, you'll pay a much lower premium than an older person with serious health issues.
More Coverage for Your Money
Because of the low cost to buy term insurance, you can buy more protection. That makes it ideal for younger families, especially those on a budget who need coverage for 30 years or less.
Policy Length Flexibility
Term policies give you the freedom to choose the length of coverage to fit your specific insurance needs. You can purchase a policy for as short as one year, but the more common options are 10, 15, 20, and 30 years.Tax-Free Benefit PayoutDeath benefits received by the beneficiary of a life insurance policy usually are not taxed as taxable income.Guaranteed Protection and Level
Premiums
With term life policies, your death benefit is guaranteed. Once you decide how much coverage you want, your fixed premium is also guaranteed not to increase throughout the duration of the policy.
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