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 November 15, 2019

Do term life insurance premiums increase over time?

term life premium increases

We all want to be able to help protect our families when we are no longer around. In order to do so, we take out life insurance policies to help cover expenses we may leave our families to handle such as funeral arrangements, debts, or other bills. When considering whether to take out a term life or a whole life policy, you may be thinking about how premiums can increase over time, questioning whether term life would be most beneficial for you.

What is Term Life?

Term life insurance is just as it sounds, taking place over a certain time period or term. These terms are usually found in 10-, 15-, 20- and 30-year intervals. The death benefit of a life insurance policy is paid at the time of your passing to help cover different financial needs such as mortgage payments, income replacement, education, or even just the cost of the funeral itself. Unlike whole life, term life insurance may not have a cash value associated with it.1

Term Life Premium Changes

One of the most common ways term life insurance is bought is with level premiums. This means you essentially lock in the rate that you pay. For example, if you take out a 30-year policy when you are 25, you will still be paying the same amount for your life insurance when you are 55 years old, assuming you have continually paid your premiums on time. Therefore, during the time of your term the premiums will not increase. However, whenever that policy ends when you are 55, your premiums may increase due to your age and your new health status.1 You may also have the option to convert your term life to whole life. By doing this, you have the potential to lock in the same rate for the rest of your life, though most of the time there is a conversion deadline.1

  1. Investopedia, How Age Affects Life Insurance Rates, 2019

Categories: Insurance, Life Insurance, Term Life Insurance

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