What is a Guaranteed Premium
It is not unusual to hear the terms "guaranteed premium" and "non-guaranteed premium." These are two terms that are common amongst term life insurance policies and can influence how much you pay. Fixed rate term life insurance.
Amazingly, the usual stance that term life insurance provides individuals with a fixed rate is not always true, although that is what many individuals opt for. Nevertheless, there are those who want to save more money because, perhaps, their budgets don't allow them much room to spend money on life insurance. If that's the case, the cheaper term policy with the non-guaranteed premium maybe a good solution for right now.
The guaranteed premium does not change throughout the life of the term. If you are paying $25 per month for your term life insurance, you are going to continue to pay $25 per month for the remainder of the term. So if the term is 30 years, that is what you will pay for 30 years.
The guaranteed premium is established at the beginning based upon the status of your health and underwriting rate classifications. So if you are 30 years old and perfectly healthy and you receive a very cheap premium, yet 5 years later you develop cancer, it is not going to have any bearing upon your premium. Your premium is going to stay the same no matter what and your death benefit will not change either.
Life assurance quote
The only instance in which the rate may increase is when the policy expires and you buy a new one at an older age and with your health status at the time. Because you're older and because your health may not be 100%, the rate will increase, but it will still be fixed throughout the term.
The non-guaranteed premium is exactly what it sounds like and it does cost less overall. For instance, you have a 20 year term policy. In 10 years, your premium is going to change. It is locked in for the first 10 years, but it changes the second half of the term.
The rates are projected to remain the same for the length of the term, but they are not guaranteed to do so. You may have a partial guarantee. According to the above example, you are guaranteed a locked in rate for 10 years and the rest is not guaranteed premium.
As for what the rate will do during the period in which it is not guaranteed, you can expect that it will increase. The insurance company makes this determination if it is needed. You may find that your rate doesn't change at all.
Think about what is best for your current and future financial state. You may decide you want the fixed term throughout the life of the policy because you don't know what your financial state is going to be 10 years from now. For those who save money by opting for a non-guaranteed rate tend to do so in hopes that their financial situation is going to improve by the time the rate increases. Some even change policy types or make changes when they can afford to pay more anyway.
So evaluate what will work for you and go with it. You want to make sure that you are insured for the well-being of your family. You don't want to leave them with extensive financial obligations in the event of your passing. When you have life insurance, you are doing them a great financial favor. That way they can concentrate on what is important and not on whether or not they can pay your final expenses.
Home contents insurance