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Term life insurance is a pure form of insurance. This means that it will only pay benefits for as long as the policy is in effect, as opposed to whole life insurance which will pay out the value of the policy once you die, no matter when that may happen. Term life insurance rates are highly variable but, generally, are lower than those of whole life insurance, especially for younger people.
First and foremost, you’ll want to compare the rates of term life insurance policies against the benefits they pay. In this regard, obviously, lower rates and higher payouts are desirable. There are some built in aspects of term life insurance rates that make this aspect of the policy a bit more complex than it may seem at first blush, however.
Term life insurance rates will increase every time the policy expires and you renew. They will also be higher if you’re of a more advanced age. These policies are best for younger people. People of retirement age will likely find themselves facing extremely high premiums for term life insurance and possibly unable to purchase such policies. Remember that those low premiums that you pay when you start the policy will constantly go up and, when you reach the age of 50 or more, they may become too high to be feasible.
Compare term life insurance rates by the amount of this increase, as well as comparing them on the basis of whether or not the insurer can raise those rates during the term of the policy, which is sometimes the case. Unexpected expenses are never a welcome thing. Look for a policy that offers a fixed rate for the duration of the term.
For long term insurance needs, you’ll want to compare term life insurance rates not from one policy to another as much as you’ll want to compare them to other types of insurance. Most insurance customers seeking long term coverage opt for whole life policies. Term life insurance is really only appropriate if you need coverage for a set amount of time—the most common terms are 1, 5, 10 and 20 year policies—and have other means of providing coverage beyond that scope.
You may want to consider term life insurance during particularly dangerous times of your life. In these cases, you’ll just be comparing term life insurance rates based on how much they’ll charge as you likely won’t be concerned with continuing the coverage for another term when the time has passed. Trips abroad, military deployments and other high-risk endeavors are examples of when you may want to consider term life insurance as a means to protect your family.