Factors that influence the desired term
- Mortgage and other debts
- Age + dependency period of children
- Current age of life insured
- Specific need to be insured
Personal term life insurance is like renting insurance for a defined fixed term. You have a guaranteed rate of premium. If you were to pass away during the term, the policy pays out.
When budget is a concern, sometimes a single shorter term insurance policy will cover that need initially. At the earliest opportunity, you should look towards improving the plan.
What happens after the initial term ends? IMPORTANT
Guaranteed renewal rates at the end of each term are usually significantly higher. The reason is that renewal is guaranteed for the next similar term, regardless of continuing good health.
Renewal rates for 10-year Term life insurance can increase as much as 300%-400%. A new policy, if you remain in good health can cost much less.