Temporary Life Insurance

It is the simplest and most cheapest form of life insurance you can buy. If the policy expires and you are still alive, then the policy obviously becomes invalid. However, you do have the option of renewing your policy, but this will be more expensive as you will be older in comparison to the time when you first purchased the policy.

Within the temporary policy, there are 2 different kinds of policy available, level term and decreasing term. Level term is the most often bought policy because it pays out the same amount when you pass away at any point during the term. The term lengths you can choose from are: 

	yearly, which means you renew the policy on an annual basis
	5 year renewable term
	10 years
	15 years
	20 years
	25 years
	30 years
	a policy that lasts until you reach a specific age, which is usually age 65

Out of these options, the 20 year policy is the most frequent policy purchased. Your age can be a determining factor though with this as a company will not give out a 20 year policy to a 70 year old, as more than likely, the insured will die.

When choosing a term policy, you should really look for a renewable policy, as when it comes to the time when your policy expires, and you don't have the chance to renew it, your only option is to set up a completely new policy. At that point, it will be 20 years later which will mean you are more susceptible to diseases, illnesses and medical conditions. If one of these develops, it will be nearly impossible to get a new type of cover.

Other factors that determines your premium is your age, sex, weather or not you drink and smoke excessively and medical history.

The premiums will remain stationary for the length of the term. In a renewable policy, the premiums increase at the time of renewal as stated previously. For example, in a five year renewable policy, you pay an annual premium that stays the same for the first five years and then the rate increases for the next five years.

The reason that level term insurance is more popular than decreasing term insurance is that the amount paid to the beneficiary remains the same throughout. With decreasing term insurance the amount of the payout lowers each additional year of the policy, which means that if you die approximately a month before the end of the cover, there is no money left in the policy to pay to your beneficiary. Quick summary on Fixed Term Life Insurance.

Universal Life Insurance