Annual renewable term life insurance, also called “renewable” life insurance, is a flexible life policy. Unlike traditional life policies, it provides death benefits in the event of early death. The insured individual may sign up for an insurance policy that expires at the end of the policy’s term, but most policies provide an unlimited amount of death benefits. It’s important to note that this type of insurance does not provide cash savings. Rather, it’s intended to pay a death benefit until the policyholder’s death – as long as the premiums are paid and the policyholder continues to pay into the policy, so it will provide coverage beyond the insured’s death.
Unlike traditional term policies, renewability is an important factor for many life insurers. Policyholders must be at least 40 years old to qualify for renewable term life insurance. Policyholders must also have cash value at the time of renewal. Policyholders who no longer meet these requirements can usually purchase a non renewable term life insurance policy instead. Non renewable term policies are available to anyone age 40 or older.
In some circumstances, whole life insurers will convert whole policies to renewable term life insurance policies. Whole life policies are basically universal life contracts. The insurance company owns the policy, while the insured retains ownership of the premium payments. Premiums are typically based on the insured’s age at the time of the original policy, whether the insured has made any claim for the policy and the total value of the premium payment. People in retirement age often choose to convert whole policies to renewable term life insurance. The easiest way to do this is by choosing the same gender as the owner of the policy.
Typically, whole life policies are less expensive to purchase than more flexible term life insurance policies. Because of this, whole life insurers may offer more attractive premiums to individuals who are younger than retirement age. If you choose to convert your whole life policy, you may also reduce the premium cost by choosing a higher deductible. Another option is to elect to pay the entire premium up-front, without making any payments during the life of the policy.
Another advantage to renewable term life insurance policies is that they are virtually guaranteed renewable. Once the policy has been in effect for six years, it becomes ‘permanent coverage’. Unlike many other types of coverage, the face value of renewable term life policies does not decrease over time. The premium payment amount does not increase over the lifetime of the policy. This makes renewable term life insurance policies a good choice for many people.
Medical exams and other requirements may affect an individual’s decision to purchase a policy. Because of this, many individuals who are younger than 65 years old choose to purchase their own coverage. While the premiums are usually cheaper when purchased independently, when you purchase them as part of a group you will likely receive a discount. In addition, renewable term life insurance provides more protection against potential losses.
As with most things in life, when it comes to insurance, price comparison is important. Many insurance companies offer special deals for those who buy their policies at the same time. For example, some companies will offer a discount if you purchase both your automobile and life policy from them. Whether you decide to go with standard or convertible term life policies, you should shop around and do the research necessary to find the best deal. Most insurance companies offer online tools to help you compare different premiums from various companies.
If you would like to add security to your family in the event of your death, you need life insurance. Deciding on the type of coverage you need and the premiums you can afford will depend on how long you plan to live. While standard and convertible term life policies provide you with peace of mind, annual renewable term life insurance policies give you additional coverage should you find yourself in need of some extra cash.