Insurance Library

Life > Term Life Insurance

There are two main types of term life insurance: non-guaranteed term life and annual renewable. The non-guaranteed term life insurance provides coverage for a short time and provides only death benefit protection. Annual renewable term insurance policies can last many years. By buying the longer term policy, you can keep your premiums down and avoid the annual increases inherent in non-guaranteed term life policies.

There is a third type of term life insurance, convertible term. It shares many characteristics of annual renewable policies, but gives you the ability to convert the policy into a permanent one in the future.

Term life insurance is usually viewed as a purely insurance policy, where you only have a payout in case the thing insured against happens, and none of the cash value features available with permanent policies.

Usually, people focus on purchasing term life insurance for protecting their loved ones from incurring debts after they are dead. If you own a home, a mortgage could become unmanageable for your spouse alone. You can also get policies that will pay for your children's educations and welfare until they become of age.

You can expect to pay more for insurance if you are a smoker, even if it is marijuana. Insurance companies do not look at the difference between types of smoke inhalation.

Applying for term life coverage usually requires that you undergo a medical exam before being set up with a policy. The medical exam is basic and covers your height, weight, medical history and blood and urine testing. Your policy may give you the option to renew at the end of your term without having another medical exam.

If you have an illness or poor medical history, you can still get life insurance coverage through a guaranteed issue policy. You can expect to pay a much higher premium. This is because the insurance company is taking on a higher risk by not knowing your medical history.