Temporary Life Insurance
By definition, term life insurance is temporary since it expires at the end of a predetermined time period. However, in the United States insurance market, temporary life insurance usually refers to term life insurance policies that have a term of between one and five years. The term life insurance rates of temporary life insurance policies are usually low because there is less risk of a claim against the insurer during very short terms.
Why Buy Temporary Life Insurance?
For young adults just beginning life independent from their parents, temporary life insurance offers a low cost alternative to other life insurance policies. Many young adults have no financial dependents, but may plan to marry and have children within a few years.
A temporary life insurance plan offers them coverage in the short term with the chance to change the coverage when they have additional financial responsibilities and higher incomes. Short term policies allow greater flexibility than long term commitments, similar to adjustable life insurance.
As A Supplement To Other Types of Life Insurance
If an individual takes out a large loan, personal or business, their current life insurance policy may not fully cover the debt and the bank or lender may require additional life insurance coverage to protect their investment. A temporary life insurance policy can provide benefits to pay the debt if the insured dies during the term of the loan.
Many creditors offer a form of temporary life insurance called credit life insurance which is a decreasing term life policy that covers the outstanding balance of a debt with premiums that decrease as the amount of the debt is reduced. Consumers also have the option of mortgage life insurance or decreasing term life insurance.
Term Life Insurance
Unlike whole or universal life insurance, term life insurance has no cash value. When the policy expires, it must be renewed, generally at a higher price. Some term life insurance policies have term periods of up to thirty years, so while they are technically temporary life insurance, they do involve a relatively long term commitment.
There are three types of term life insurance premiums, level term with fixed premiums, increasing term with payments which go up over time, and decreasing term where payments become lower. These are just a few of the many types of term life insurance plans available.
One Year Renewable Policies
One year renewable policies have a term of one year after which the life insurance company guarantees to renew the policy even if they policyholder has developed a health condition, found a preexisting condition, or entered a high risk profession which would make them otherwise uninsurable.
The renewal clause stipulates that the amount of the death benefit cannot be raised, but it can be lowered to obtain more affordable life insurance rates. Individuals who anticipate future changes that may make it difficult for them to get life insurance may prefer this temporary form of life insurance, or they could consider no exam life insurance or guaranteed issue life insurance.
Return of Premium Temporary Life Insurance
Some temporary life insurance policies have a return of premium clause, similar to return of premium life insurance (ROP). This clause allows the policyholder to get a refund of all the premiums paid for the life insurance if the contract is kept in force for the entire agreed upon term and the death benefit is not paid out.
While this is not the same as the cash value options offered by whole and universal life policies, it does pay the insured cash at the end of the policy term. The premiums for return of premium temporary life insurance are higher than those of standard term policies.
Term Life Insurance Quotes
To find affordable temporary life insurance, consumers can enter their zip code at TheLifeInsuranceQuote.com and get free, instant term life insurance quotes. We offer online quote comparisons on all types of life insurance, so individuals can compare rates, coverage, and life insurance companies to find the best policy that meets their financial and circumstantial needs. Just enter your zip code to begin getting life insurance quotes now, and find an affordable policy from one of the best life insurance companies in the U.S.
