When you’re shopping for the right kind of life insurance for you, one thing to consider is the premiums you will pay and whether they will remain the same or be raised. Just as there are many types of life insurance policies available, some will have level premiums, meaning that insurance premiums will remain the same, while others will not.
Ordinary Whole Life Insurance
Let’s begin with ordinary whole life insurance (which can provide coverage for your whole life). With ordinary whole life insurance, premiums may be level for as long as you have the policy.1 So, if level premiums are a must for you, ordinary whole life insurance might be a good option. Insure.com lists other types of whole life insurance, like limited payment whole life, in which you pay premiums for a specific period; single premium whole life, in which the policy is paid up after a large initial payment; and modified premium whole life insurance, which provides a lower premium during the early life of the policy.1
Universal Life Insurance
A universal life insurance policy allows the insured to vary their premium payments and adjust their death benefit as their needs change.1 This unique feature may be appealing for those with a growing family, those undergoing a change of career, and for those who just enjoy a little more flexibility in their life insurance policy.
Term Life Insurance
Term life insurance premiums may change over time in accordance with changes in the policyholder’s health and age. However, some term life policies may advertise premiums at a guaranteed rate, meaning that the policyholder’s premium will not change during the period of time outlined by the provider. Term life policies offering guaranteed premiums are often more expensive than other term life policies – but that doesn’t mean they shouldn’t be considered. 2
Understand Your Policy and its Premiums
The bottom line is, you should read through and understand your policy thoroughly before you buy it to know if your premiums will be level or if they can increase. Speak with a financial advisor to help you decide what the best coverage would be for you, and if you have questions about life insurance premiums, speak with a licensed insurance agent.
- Insure.com, Whole Life Insurance: How it Works, 2020
- U.S. News & World Report, What is Term Life Insurance?, 2020
Categories: Insurance, Life Insurance