Purchasing life insurance means understanding the different types, modes, and payment plans are available so you can make the best-informed decision. Choosing the right one for your needs starts with selecting a benefit level that protects your family financially while paying premiums that are within your budget.
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One of the more important decisions you’ll need to make is whether to choose a convertible or renewable form of term life insurance. While similar in the sense that the effect happens at the end of policy term, there are important differences that you’ll need to consider.
Convertible Term Life Insurance
At the end of the term, you can choose to convert this policy into whole or permanent life insurance. This policy is ideal for younger people who may not be able to afford a whole policy, but still, want the protections of life insurance and the opportunity to upgrade to permanent life insurance at a future point.
The advantage is that upgrading a policy is easier than purchasing a new one and adjustments can be made to fit your current situation better.
Of course, if you do not want to convert the policy when it ends, then you will have to get a new term policy if you still want coverage. This means that you will need to consider your options before choosing a convertible coverage if that is what you want at the end of your term insurance.
Renewable Term Life Insurance
A renewable form of term life insurance means that you can get a new policy with the same parameters, although there might be some changes in the premiums or other conditions based on your age or changing health. A renewable policy makes it easy to stay insured with minimal paperwork which means less stress.
However, if you were thinking of upgrading to a whole or permanent life insurance, then you will have to get a new policy.
While most people are familiar with monthly premium payments, other methods may suit your budget better. The most common form of payments for life insurance includes monthly, quarterly, and semi-annually or paying twelve times, four times, or twice per year.
While the premiums are roughly the same, most life insurance companies offer discounts for quarterly and semi-annual payments. This should be taken advantage of if you can afford to make larger payments.
The pros and cons of choosing different payment methods will rest with your budget.
If you can afford the larger payments for each quarter or semi-annually, then do so as you will save on the interest rates. If not, then stick to the monthly premiums that better fit your budget, so you do not overextend your finances.
Choosing the right type of premium life insurance and selecting the payment plan that fits your budget provides financial security for your family in case the worst should happen to you.
Be sure to go over all the options until you find the right plan, benefit level, terms, and payment policy that best suits your needs.