Term life insurance is well suited to meeting high, short-term protection needs for a low initial cost. For example, a couple with young children and a mortgage might select term life insurance as an affordable way to obtain the full protection they need today. Many term life insurance policies are renewable after five, 10 or 20 years with no need for proof of health. At renewal, the price will increase as appropriate for your age. These increases in premium can become substantial in later years. Coverage usually ends at age of 75 or 85. Many term life insurance policies also provide the option to convert to permanent life insurance, with no proof of health. However, this convertibility often expires around age 65 or 70. Be sure you understand the available conversion options. Some companies impose significant restrictions or have a limited choice of permanent life insurance policies to which you can convert.
The overall cost of term life insurance reflects:
• Initial premium
• Renewal rate and whether evidence of insurability is required
• How long you’ll need the protection
• How much flexibility you want to meet your changing needs in the future