Insurance companies charge you premiums based on your health and age. When you buy life insurance to cover you for only a set number of years, the insurance companies offer you different types of premium options to pay for your coverage. This article explains some key words that insurance companies use to characterize these premium types. Understanding them is critical to recognizing the possible price and length of your coverage.
Life insurance companies expect you to live a certain number of years, statistically. The longer your reportage even when you maintain your health, the greater is your risk of dying. Also the longer you hold coverage, the greater is your chance of developing health problems that will also increase your risk of dying. Recognizing this, insurance companies contrive different premium types to protect their liability and, perhaps, lower your current premiums temporarily.
When you buy 'term insurance' you're paying for 'pure' indemnity. There's no savings or cash value component associated with the policy. Its premiums (i.e. the defrayment you make to own the policy) covers only the risk of death and payment of the 'death benefit' throughout your reportage time.
Many indemnity companies offer point premium term indemnity. Premiums may remain point (i.e. constant) for a period of 5, 10, 15, 20, 25 or even 30 years. These policies are inexpensive and can provide relatively long term coverage.
Some stage premium term policies contain a warrantee of level premiums; others don't. Without a guarantee, the indemnity company can surprise you by raising your premiums (the amount you must pay to keep the policy in force); even throughout the time you expected your premiums to remain level. Make sure you understand the terms of your policy.
When considering which type of policy to use, you'll need to familiarize yourself with all the terms and conditions that the policies present. If you purchase indemnity - life as well as health or disability - you're obviously interested in maintaining it until you feel that you don't require it anymore.
You should understand some key terms pertaining to indemnity that have a direct bearing on maintaining your police and reaping its proceeds. Four terms of particular importance to them are:
A conditionally renewable policy means that you can renew your policy but subject to the insurer's conditions. Here, the insurer can cancel your policy if you've produced too many claims or, for some reason, appear to be a higher risk. Under such a circumstance an insurer can drop you whenever you require the reportage most. As an example, whenever you paid on a conditionally renewable health insurance policy for 20 years without filing many claims, your insurer can drop you whenever you turn 60 or 70 -- just if you're tenably to require more medical services.
A renewable policy allows the beneficiary to extend the reportage term for a set period of time without having to re-qualify for reportage. It is contingent on premium payments being up to date. A life indemnity contract having a renewable term clause would be beneficial because future health circumstances are unpredictable. Although the initial premiums are plausibly to be higher than those of a life insurance contract without a renewable term clause, buying this type of insurance is often in the beneficiary's best interest.
A guaranteed renewable policy prevents the insurer from unilaterally dropping you as long as you keep paying your premiums on time. Virtually all health indemnity policies written today are guaranteed renewable. Tho' re-insurability is guaranteed, premiums can rise based on the filing of a claim, injury, or other factor that could increase the risk of future claims.
Premiums can also be raised on an entire class of insured individuals during the life of a guaranteed renewable policy for health, life or disability insurance. Most insurers offer both guaranteed renewable policies and non-cancellable policies. When premiums are similar for both a guaranteed and a non-cancellable policy, the non-cancellable policy will offer the double warrantee of re-insurability and locked-in premiums.
Uchenna Ani-Okoye is an internet marketing advisor
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