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One of the most popular types of life insurance for the budget-conscious policyholders is term life insurance. This policy offers a significant death benefit for a fixed policy term. However, there are several factors to consider when shopping for a policy. Let’s dive deeper into the different types of term life insurance to help you determine which could be best for you.
Term life insurance is a policy type offering coverage for a fixed term length that often ranges from 10 to 30 years. If you pass away during this term, your loved ones receive a significant death benefit to use as they need. If coverage expires before you pass away, you can renew coverage at higher rates, get a new policy, or forego coverage. Premiums for this type of policy can be the most cost-effective option.
Several factors can impact your potential coverage needs:
Several forms of term life insurance are available, including:1
Level term life insurance premiums don’t change throughout the policy term. This helps you easily fit premiums into your budget and plan your finances around them. As a result, it’s easier to keep up with your coverage costs.
Yearly renewable term life insurance lasts one year but allows you to renew coverage at the end of each term. Each renewal causes an increase in premiums. Since these policies are less risky to the insurer, they may be more cost – effective than level term life insurance at first.
Decreasing term life insurance policies feature a death benefit that decreases over time, but premiums stay the same. These policies may work if your loved ones’ coverage needs decrease over time. They may also work well if you need to help cover debts since those shrink with each payment.
Decreasing term life insurance policies are less risky for insurers since the death benefit decreases over time while premiums don’t change. These policies tend to be more cost effective than level term policies that start with the same amount of coverage.
Return of premium life insurance refunds your premiums paid if coverage expires and you don’t pass away, but premiums tend to cost more since the insurer bears the risk of repaying you. Therefore, these policies may help policyholders confident they’ll outlive coverage but want added peace of mind.
Convertible term life insurance lets you switch your term policy to a permanent life insurance policy, usually at any time throughout the term, with no medical exam. This can help you hedge against the risk of outliving your policy and avoid taking another medical exam for new coverage. However, the term policy premiums may be higher than a level term policy. Plus, keep in mind that permanent life insurance costs more to account for its lifelong coverage and cash value.
Don’t wait until it’s too late. Help cover yourself and your family with coverage from Aflac.
Although term life insurance tends to be quite affordable, several factors can impact the cost:
When comparing term life insurance options, look closely at the following factors:
The coverage amount is crucial. This represents the death benefit your loved ones receive if you pass away. Make sure to look at your current income and that of your loved ones, along with expenses and debt payments. This will help you see which policies offer enough coverage for your needs and avoid overpaying.
Longer term lengths cost more but may be worth it if you need coverage for a longer period. For instance, if you’re starting a family and want life insurance until your children become adults, you may consider a 20-year policy.
Life insurance rates, or premiums, can vary depending on your personal factors and medical history. However, insurers may charge different premiums for the same policy on the same person. Getting multiple quotes helps you find the coverage you need.
You can add riders to customize your coverage, either complimentary or for an additional cost. For example, an accelerated death benefit rider may let you access some of your death benefit while alive if you’re diagnosed with a qualifying terminal illness and need assistance to help pay for medical costs and related expenses.
Another example is the guaranteed insurability rider, which lets you purchase additional coverage at specific times during the policy term without a new application or medical exam. This rider may help if you take on more debt or your expenses increase.
Term life insurance doesn’t last for life. It can be an excellent option to consider if you need a simple policy with maximum coverage for your premiums. From level term to return of premium insurance, many types of term life insurance exist to suit a wide range of needs.
Aflac’s term life insurance comes with various term lengths, offering comprehensive coverage at premiums that fit your budget. Speak with an agent today to explore policies and learn about our other life insurance options.
1Investopedia – Term Life Insurance: What It Is, Different Types, Pros and Cons. Updated January 11, 2024. https://www.investopedia.com/terms/t/termlife.asp. Accessed April 15, 2024.
2LifeInsurance.org - Is it True That Men Pay More for Life Insurance? https://www.lifeinsurance.org/questions/men-pay-more-for-life-insurance. Accessed April 15, 2024.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400.65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series: Whole: In Arkansas, Delaware & Oregon, Policy Q60100M. In Idaho Policy Q60100MID. In Oklahoma, Policy Q60100MOK. In Texas, Policy Q60100MTX.Q60000 series: Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions.
Aflac WWHQ | 1932 Wynnton Road | Columbus, GA 31999
Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
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