What are the main types of term life insurance available for purchase?
Generally there are three main types:
Level term insurance
This policy will provide a death benefit value that remains the same for the full term of the policy. The death benefit is thus considered to be level. In some cases the premiums paid may also remain level for the duration.
Decreasing term insurance
In decreasing term insurance, the death benefit value decreases through the duration of the policy. This type of policy can be beneficial if the death protection is required to pay off a financial obligation that also decreases over time – a mortgage or business loan, for example.
Generally premiums for this type of policy remain the same for its entirety.
Annual renewable term insurance
The death benefit in this type of policy remains level throughout the term, however the premiums will increase annually.