Term Life Insurance
is the most basic form of life insurance. Term life insurance provides temporary protection for a specified, limited time that can be defined in years or by the age of the insured. If the insured dies during the term of coverage, then the policy's death b
Level Term Insurance
The most popular form of term life insurance is level term. Level term insurance provides a level death benefit and charges a level premium for the duration of the coverage term. During the term of coverage, neither the death benefit nor the premium chang
Level Premium Term
Regardless of their term of coverage, all level term life insurance policies feature a level premium for the term of coverage. Accordingly, they are sometimes called level premium term life insurance policies.
Term policies that provide coverage for a few
Renewable Term
Two optional features common to level term insurance contracts are renewability and convertibility.
The renewability feature allows the coverage to be renewed for another period or another term without the insured having to provide proof of insurability,
Annual renewable term
The oldest form of renewable term insurance is annually renewable term (ART), sometimes called yearly renewable term (YRT). As the name suggests, ART policies provide coverage for one year, at the end of which the policyowner may renew the contract for an
Re-entry option
Some insurers offer a "re-entry" renewal option that lets the owner renew the policy at current rates that are lower than the attained age rates that would be used in a standard renewal. To get the lower re-entry rate, the insured must first prove insurab
convertible term
The convertibility provision lets policyowners exchange their term coverage for a permanent life insurance policy without having to provide evidence of insurability. The new policy's face amount cannot exceed the term policy's face amount.
Typically, the
Attained age or Original age Conversion
Converting a term policy to a permanent policy takes place on either an attained age or an original age basis.
If a policy is converted under the attained age method, the premiums for the converted policy are based on the insured's age at the time of the
Decreasing term insurance
Decreasing term life insurance provides temporary protection for a set period. The main difference between level and decreasing term is the amount of the death benefit payable. The death benefit under a level term policy is set and remains level over the
increasing term insurance
Increasing term life insurance is the opposite of decreasing term. With this type of insurance, the death benefit increases over the term to a preset amount or at a preset rate. The premium normally remains level, though at a higher level than either leve
Gina owns a $200,000 five-year renewable term insurance policy and wants to renew the policy at the end of the term. In this case, all the following statements are correct, EXCEPT:
Gina must prove insurability before the insurer can renew the policy.
Andrea bought a $300,000 term-to-55 policy. Which of the following statements about the policy is NOT correct?
The policy will pay the entire death benefit only if Andrea reaches age 55.
Andrea's $300,000 term-to-55 policy will give $300,000 of coverage until she reaches the age of 55. When she turns 55, coverage ends and the policy ends without value.
Term life insurance is well suited for all the following needs EXCEPT:
a source of emergency cash for any financial need.
Because it only offers protection for a limited time, term life is best used for temporary needs that have a defined end-date. Term life is pure insurance, with no cash value (or "savings element") associ
The basic purpose for the re-entry option with a renewable term life insurance policy is to let the policy owner
renew the policy at lower current rates, though evidence of insurability would be required
To get the lower current ("attained age") rate that is the feature of the re-entry option, the insured must prove insurability at the time of renewal or at periodic