Non-Guaranteed Term Life
Non-guaranteed term life provides coverage only for a short time (usually a year) and is pure death benefit protection. The risk with term life is that your health might deteriorate and you could be unable to get another policy once the term is up. Premiums can also increase dramatically as you age. Term life insurance is a good choice for young people who can’t afford the higher costs of permanent insurance, or for people with financial obligations that will disappear in time, such as a car loan or a mortgage.
Annual Renewable and Convertible Term
Annual renewable term insurance policies are for multiple years, usually 10, 20 or 30 years. By buying a longer term policy, your costs can be stretched out to avoid the annual increases found in non-guaranteed term life. Convertible term is similar to annual renewable term, but it offers the opportunity to convert the coverage to a permanent policy in the future — when regular term premiums might become cost-prohibitive because of your age or health. This is a good choice for young people, who are unable to afford the higher cost of permanent insurance right now.