Many factors affect how long a consumer chooses to carry a term life policy.<\/p>\n
These might include their age, the price of the policy, and the reason they are getting life insurance in the first place.<\/p>\n
When you purchase a term life insurance policy, it is valid for a set amount of time.<\/p>\n
Usually, the price is also set throughout the lifetime of your policy. Typical term life policies can be anywhere from 10 to 30 years.<\/p>\n
Term options generally increase in increments of five years.<\/p>\n
Consumers also have the opportunity to purchase a yearly renewable policy, or one-year level term and five-year term life insurance.<\/p>\n
While some companies offer annual renewable term, very few offer five-year term coverage.<\/p>\n
Annual renewable term life insurance has a price increase yearly<\/p>\n
Most term life insurance policies have the same premium for a considerable amount of time (called level term).<\/p>\n
An annually renewable policy may initially be cheaper than a level term life policy, but the price will increase yearly as the policyholder ages and renews their coverage.<\/p>\n
An annually renewable policy may make sense for your needs if you only need term life coverage for a short period of time.<\/p>\n
Simply put, the premium goes up every year. \u00a0It’s cheaper the first couple years than a say a 10, 15, 20, or 30-year term, but it will eclipse those level rates shortly.<\/p>\n
In an annual renewable policy, instead of locking in a premium for a number of years, the premium is adjusted each year.<\/p>\n
However, the contract can be locked in. An insurance company can offer customers a certain number of renewable years, where renewal will be automated at a set premium rate, although that rate will increase by the year.<\/p>\n
To help customers understand what they’re signing up for, insurance carriers may offer a premium chart that will show how the rate will be increased each year, to be recalculated for the new risks of the insured individual being one more year older.<\/p>\n
One of the questions that shoppers might ask is this: being that you can get longer-term insurance without premium hikes, why would you want to take out a policy where you pay more each year?<\/p>\n
One reason is that some shoppers are just thinking short-term. One of the most common situations is where the customer may not need term insurance for 20 years, because of job changes.<\/p>\n
Say there’s a customer, let’s call him George, who is in between jobs. His last employer offered low premium group life insurance benefits because of his full-time status.<\/p>\n
Right now he’s working part-time and doesn’t have any benefits, but he has some good job interviews lined up, and he knows that all of these companies<\/a> will allow him to sign onto another lower premium group life insurance plan as part of their benefits packages.<\/p>\n Did you know that some lenders require you to carry a life insurance policy before they will give you a loan? This protects the bank in the event that you die and can no longer pay back the money you borrowed. If you are planning on getting a short-term loan of just a few years, an annual renewable term may end up being cheaper than a 10 year term.<\/p>\n It may also be a good idea to carry annual renewable coverage if you in a transition period of your life. For example, a medical student may want to purchase coverage just until they are finished with school.<\/p>\n Annual renewable policies are generally very inexpensive in the first few years of coverage when compared to longer-term life insurance policies.<\/p>\n A student that does not have much money can provide stability for his family in the event that he dies with this type of policy. Then he can upgrade to a 20 or 30-year term life policy once he enters a high-paying professional medical career upon graduation.<\/p>\nAnnual Renewable Term for Smokers<\/h3>\n