What is the advantage of level term life insurance vs. yearly renewable term life insurance?
The advantage of level term life insurance is that the premiums remain level over a specified period of time. Yearly renewable term life insurance has a lower initial premium; however, the premium rises each year. Yearly renewable term life insurance is only cost effective for a few years because of the rising premiums. If you need term life insurance protection for more than a few years, then a level term life insurance policy can cost less. Please carefully consider the length of the level premium period that will suit your needs. For example, if the primary purpose of the death benefit is to provide income to support very young children and/or to fund college education expenses, a 20-year level premium might be appropriate. If these children are already in their young teens, you may need only a 10-year level premium (longer level premium policies are more expensive). After the level premium period expires, most policies require you to requalify with medical underwriting in order to
If you require life insurance for longer than a few years, level term life insurance is a far more cost effective plan. While the premiums of a yearly renewable term life insurance policy are initially lower, they rise every year and quickly become much more expensive than the level term life insurance.
While yearly renewable term life insurance has a lower initial premium, the premium rises each year. The advantage of level term life insurance is that the premiums remain level over a specified period of time. Yearly renewable term life insurance is only cost effective for a few years, so if you need insurance protection for a few years a level term life insurance policy could end up costing you less. The longer the level premium policy is for, the more expensive it is. Therefore, it is important to consider the length of the level premium period according to what will suit your needs. If the primary purpose of the benefits from your policy is to support very children in their teens, a 10-year level premium may be appropriate. However, if these children are very young you should probably consider a 20-year level premium. Most policies require you to re-qualify with medical underwriting after the level premium period expires in order to receive a favorable premium. If you do not or can
