Читать книгу Personal Finance After 50 For Dummies - Eric Tyson - Страница 40

Term life insurance is pure life insurance protection. It’s 100 percent life insurance protection with nothing else, and, frankly, in our opinion, it’s the way to go for the vast majority of people. Agents typically sell term life insurance as so-called “temporary” coverage, which is just fine because life insurance is not a permanent need during certain years of life when others are financially dependent on your employment earnings.

Remember that the cost of life insurance increases as you get older. You can purchase term life insurance so that your premium steps up annually or after 5, 10, 15, or 20 years. The less frequently your premium adjusts, the higher the initial premium and its incremental increases will be.

The advantage of a premium that locks in for more years is that you have the security of knowing how much you’ll be paying over that time period. You also don’t need to go through medical evaluations as frequently to qualify for the lowest rate possible. Policies that adjust the premium every five to ten years offer a happy medium between price and predictability.

The disadvantage of a term life insurance policy with a long-term rate lock is that you pay more in the early years than you do on a policy that adjusts more frequently. Also, your life insurance needs are likely to change over time. So, you may throw money away when you dump a policy with a long-term premium guarantee before its rate is set to change.

Be sure that you get a policy that’s guaranteed renewable. This feature assures that the policy can’t be canceled because of poor health. Unless you expect that your life insurance needs will disappear when the policy is up for renewal, be sure to buy a life insurance policy with the guaranteed renewable feature.