Different types of insurance — such as homeowners, car or health insurance — can provide the security of knowing that your assets are protected financially for years to come. But it can also come with a degree of unpredictability, as your policy’s premium payments may increase over time due to interest rates or other factors. Buying term life insurance policy.
When it comes to life insurance, consumers can avoid these cost increases depending on what type of coverage they buy. Guaranteed level term life insurance is a type of coverage with fixed premiums that do not increase over the life of the policy. When a policy premium can remain level for up to 30 years (or even longer, in some cases), this premium stability can lead to more certainty in savings and budgeting.
In addition to the premiums staying the same, the death benefit of a guaranteed level term life insurance policy also typically remains unchanged over the life of the policy. This helps ensure that an individual’s beneficiaries will receive the full benefit payout amount that was originally purchased.
How is guaranteed level term life insurance different?
There are several different types of term life insurance, as well as different financing and death benefit options. For example:
Annual renewable life insurance provides policies that renew on a yearly basis. These policies can offer a beneficial way to obtain short-term coverage, and consumers only pay for the coverage they’re using now. When these policies renew, however, they tend to do so at a higher rate each year.
Life insurance programs
Decreasing term life insurance policies feature premiums that usually remain constant. However, the death benefit gradually decreases in value over the lifetime of the policy.
Increasing term life insurance is just the opposite of decreasing term life insurance. The death benefit may be periodically increased over time as your needs change, but the premiums will also change to correspond to the higher death benefit.
Return of premium term life insurance actually returns paid premiums back to the owner if the policyholder survives the policy term. But these policies often feature higher premium rates.
Convertible term life insurance is a type of policy that begins as term (or temporary) coverage but includes the option to be converted to permanent insurance. This is a good way to help consumers remain flexible and adapt their life insurance as their life changes. But the option to convert a term policy typically must be made within a certain timeframe (such as within the first 10 years of the policy), and a conversion will usually lead to higher premiums.
Permanent life insurance often features cash values, potential borrowing power, interest crediting options, paid dividends and more. While these features can be beneficial, they can also cause premiums and death benefits to fluctuate.
Guaranteed level term life insurance is unique in that the policy is the same in year one as it is in year 30, with the same premiums, the same benefits and the same coverage. This type of life insurance allows consumers to know exactly how much they will be paying in premiums, how long they will be paying them and how much will be left behind for a beneficiary.
This kind of cost certainty and predictability allows people to obtain the life insurance coverage they desire with the affordability they need.
Buying guaranteed level term life insurance
The process for buying guaranteed level term life insurance is no different from that of most other types of term life insurance. Choose a term (which can vary from 10 to 35 years at AIG insurance companies), a coverage amount (which our handy coverage calculator can help you with) and then let an AIG-appointed life insurance agent work with you to obtain the desired coverage.
Life insurance important terms
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