TERM LIFE INSURANCE COVERAGE TYPES
ANNUAL RENEWABLE TERM
Annual renewable term life insurance coverage (ART) is the simplest form of term life insurance commonly available. At the beginning the ART policy will cost the least among all forms of term life insurance coverage. That is because this form of term life insurance coverage is priced for each year of attained age while you are covered under the policy. Coverage one year at a time will cost less than level term policy options that average rates for many years in the coverage term. However, what this also means is that the price for coverage increases every year you retain coverage and will cost more than level term policies at some point in similar length terms.
Annual Renewable Term life insurance coverage is typically bundled in 5 to 30 year periods of guaranteed renewability but the price for each year of term life insurance coverage will be higher than the last. What separates the annual renewable term style of policy from more common term life insurance coverage is that the ART coverage cost increases each year. The cost of the more common term life insurance policies are level during the entire term of coverage and at the beginning these will cost more than ART policies (but will cost less later). Like all life insurance the cost of the policy is calculated for each year of the expected remaining life of the policy term and that is why the cost goes up each year. Each year the cost of coverage increases to match the cost for the new attained age as if the customer bought their coverage for the first time in that policy year. In the strictest sense, insurability is required to qualify for coverage at the outset but is renewable for the length of the selected term. To buy term life insurance coverage beyond the initial time frame for new terms of coverage it is commonly required that the insured be able to meet the insurability standards of the carrier. ART is not commonly written today and level term options are more popular.
LEVEL TERM LIFE INSURANCE
Level term life insurance coverage is the most popular form of term life insurance coverage purchased these days. The primary benefit of level term life insurance coverage is the premium that is level and averaged across each year in the coverage term. The carrier calculates the rates needed for each year of the policy term, adds them together with their other costs, divides them by the length of the coverage term and arrives at an average premium that is charged for each year that coverage is maintained during the term. This means that the coverage cost for the term life insurance coverage remains the same for the entire policy term whether that is 10, 20 or 30 years.
Our customers like the convenience of knowing that their term life insurance coverage will remain level throughout the time that they use the coverage. However, during earlier years of the policy the coverage under a level term life insurance policy will actually cost more than the same cost under an annual renewable term life insurance policy. However, in the later years the cost of a level term life insurance policy will actually be less than that under an ART policy. Most level term policies do not guarantee that additional terms can be purchased without evidence of continuing insursability. This is one of the biggest issues with using term life insurance coverage for long term coverage needs. Moreover, any additional terms of coverage after the initial term will be calculated at current life insurance costs at the new and older attained age. This means that periodic cost will usually be significantly different, and the longer the time between the first application, and the next, the higher the difference will be. Most terms life insurance policies do have an option to convert to a permanent form of life insurance during the term but any conversion will be at the attained age and at current rates for that age. Level term life insurance coverage is a popular form of protection nonetheless.
ABOUT THE AGENCY SERVING YOU
You’re just a click away from being able to enter your basic information and obtain a level TERM LIFE INSURANCE QUOTE INSTANTLY ONLINE. You can call the agency and speak with a 37 year veteran of the insurance business. Ask for Terry McCarthy. He holds the designation of Chartered Financial Consultant (ChFC) conferred by the American College in Bryan Mawr, PA. He also holds the Chartered Life Underwriter (CLU) designation, also conferred by the American College and has direct and meaningful experience helping clients with life insurance for personal or business needs. We’re just a phone call away. Call us today for personalized attention on your term life insurance coverage needs. Dial (513) 779-7920 the Cincinnati area and (800) 823-9643 everywhere else in Ohio.