Explain the features and types of term life insurance.

Term life insurance

Term life insurance is an inexpensive life insurance policy that pays a financial benefit to the named beneficiary upon the death of the insured. Term insurance is a basic form of life insurance and is the best worth for most customers. For the people in their 20s and 30s, the premiums are less costly than those for whole life insurance. Many customers opt for term life insurance to provide the security to their families. In term life insurance, the premiums on the term policy increase as the insured grows older. It covers the insured only during a specified period of time and premiums are less expensive. It doesn’t accumulate a cash value.

In a term life insurance plan, the insured must undergo a basic physical exam conducted by a nurse (including blood test) to make certain they are insurable. The policy remains in effect as long as the premiums are paid. The most popular models of term life insurance are annual, 7-year, and 10- year policies. The premium slightly increases every year in annual policies and in 7-year, and 10-year policies, the premiums remain the same for 7 or 10 year periods of time.

Features of term insurance
The following are some of the features of term life insurance: 

Initial affordability - Term life insurance policy premiums are less expensive than those for whole life insurance. So, many customers prefer this policy. 

Adjustable premiums - Term life insurance policies have flexible premiums. The premiums may increase or decrease at some point specified in the policy based on likely changes of investment earnings, humanity experience, persistence, and expenses. However, premiums may never be raised above the maximum premiums specified in the policy. Renewability - Term insurance policies allow the policyholder to renew coverage without having to undergo any medical test. Each time the policy is renewed, the premium increases according to the attained age of the insured. 

Conversion - Term insurance policies are convertible. Conversion allows the policyholder to interchange a term life insurance policy for any permanent life insurance policy accessible by the company at any time while the policy is in force (subject to established policy minimums).

Types of term insurance
The following are the various types of term life insurance: 

Level term - Level term is currently the most common type of term insurance. With this kind of policy, both the premium and the amount of coverage are expected to stay the same for a specified number of years. Some coverage may last outside the level period, but not always at the same premium. 

Decreasing term - Insurance can be useful for insuring a decreasing debit such as a loan. The amount of insurance protection decreases along with the level of needs while the premium generally stays the same. 

Renewable term - Renewable term is a common variant of term insurance, the most general being yearly renewable term. With most renewable term policies, the coverage by design renews at the end of each term, regardless of any changes in policyholder’s health or occupation. At renewal, the premium rises, replicating the increasing probability of policyholder’s death, while the coverage amount stays level. Several renewable term policies can be renewed until age 65 or 70; some until age 100.