- Yearly Renewable Term
The lowest cost, low cost term life insurance policy is
yearly renewable term insurance
otherwise known as
annual renewable term life insurance
or
increasing premium life insurance.
As the name implies the policy is renewed each and every year by just paying the premium. The premium, however, increases each year by a predetermined amount.
Although this
type of insurance
starts out as the lowest premium low cost life insurance it can end up being quite expensive depending on how long it takes the insured to die. In fact with the premium increasing every year it can end up not being a low cost term life insurance policy at all but the most expensive term life insurance policy you can buy. If you think about it if your premiums increase for 20 or 30 years you cannot avoid paying a very high premium eventually.
The yearly renewable term policy should be used for very short term needs. If you have to start out with this policy because of it's
low cost
you should be converted at your earliest convenience. A young married person accumulating cash to purchase a house or for an upcoming baby could find this type of insurance very useful and cost effective.
- 5 Year Level Term
Next to the yearly renewable term, as far as low cost term life insurance is concerned, is the
5 year level term policy.
Here again, as the name implies the premium is paid for 5 years and remains level for the entire 5 year period. The death benefit also remains level for 5 years. After the initial 5 years some 5 year term policies are renewable.
Like the yearly renewable term policy this policy can be used by young people who are working to accumulate large amounts of cash in a short period of time...thus leaving limited cash for
insurance premium
payments.
Business people
who need a policy to cover a loan in case of that persons death would find this type of insurance very helpful. It can also be used for
partnership insurance
on a temporary basis. This policy should be converted to a more
permanent type of life insurance.
- 10 Year Term Insurance
10 year term insurance
can also be considered low cost term life insurance. Although the premiums are a little higher than the 5 year term policy they can still be considered low cost. The policy remains in force for ten years as long as premiums are paid. The death benefit remains level for the entire 10 year period and the premiums also remain level.
This type of term life insurance can be ideally used by young married people,
small business owners
in the infancy of the business and to cover an outstanding loan in the event that the owner should die before paying off that loan. It can also be used to fund partnership
buy sell agreements,
on a temporary basis, and to fund buy sell agreements in a
corporation.
