Term Life Insurance

Term Life Insurance typically range from 10 to 30 years and increase in 5-year increments, providing level term life insurance. Among the most popular life insurance products available, term life insurance policies tend to be more affordable. They typically provide an amount of coverage for much less than permanent types of life insurance. 

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How does it work?

Depending on the type of policy, term life insurance can offer fixed premiums for the entire term or life insurance on level terms. The death benefits can be fixed as well. Because it's affordable and the payments can stay the same, term life insurance policies are popular with young people just starting out, families and people who want protection for a specific period of time. For example, someone who wants to protect an income until retirement or while paying off a home mortgage. 

Term life insurance doesn't accrue cash value like several other types of life insurance, but with many term policies, beneficiaries do receive the full face amount. For example, if a policy's face amount is $100,000, the beneficiary receives the full amount, pure and simple. Even better, the benefits paid by on a term life insurance policy are tax free, according to current tax laws. 

There are several types of term life insurance policies available through AIG Direct, including level, renewable and convertible. 

Level Term Life Insurance

One of the most popular types of term life insurance, level term life insurance (or term level life insurance), offers life insurance on level terms or a fixed premium payment for the duration of the term. It also has a fixed benefit amount and the terms range from 10 to 30 years. A longer term could mean a higher monthly premium, because the carrier typically averages the cost of insuring someone who is younger with the cost of insuring someone who is older (when premiums are more expensive). Because level term life insurance has a "set it and forget it" fixed payment, it can be easier for people to budget. Having a fixed benefit that pays the face amount also holds appeal as straightforward, "pure" insurance.

Option to Convert Term  Life Insurance

The option to convert term life insurance can be "a valuable benefit" for some. This option allows people to convert their term life insurance into a permanent life insurance policy, without a medical exam or the need to prove insurability. As time goes on, policyholders may need more coverage, or they might decide a policy with a cash value makes more sense. Having the ability to convert the policy offers nice flexibility as needs or financial goals change. There are two things to be mindful of with this convertible option. First, when you convert to a permanent life insurance policy, the premium increases. Second, there is typically a window during which you can convert. The ability to convert does not run for the entire term, so it's wise to watch for the deadline.