Term insurance is the cheapest form of life insurance. It’s commonly called “temporary insurance” because term life is not designed to last forever. Ten year level term is the most popular form of term life insurance policy because it is very inexpensive even at large face amounts and is relatively easy to obtain.
What is 10-year Level Term Insurance?
Ten year level term insurance is a variation of level term insurance that offers a fixed, guaranteed rate, or premium, for the first 10 policy years. Your actual rate is based upon a number of underwriting criteria including your age and health, the amount of insurance and any smoking as well as hobbies or hazardous sports or avocations. Ten year term is very inexpensive and easy to acquire and is the ideal policy for covering short term needs.
Because term life premiums eventually increase in the future, most people drop their policies long before their ultimate life expectancy. For this reason, insurance companies generally have very favorable claims experience with term life making it a very profitable part of their overall business. This explains why term insurance is so cheap and as a result is one of the most popular types of life insurance you can buy.
How does 10-year Level Term Life Insurance Work?
A 10-year level term policy guarantees a fixed rate for a 10 year time period. However, you are not obligated to keep the policy for the full 10 years. You can drop coverage at any time simply by discontinuing premium payments. The real advantage is that the insurance company is on the hook for the level rate for the first 10 policy years. In other words, you can drop the coverage at any time without penalty but the insurance company must honor your rate for the first 10 policy years. At the end of the 10th policy year, your rate will increase significantly and most 10-year term policies are not continued beyond the initial level term period. Most 10 year term policies are renewable to age 95 and can be continued as long as the higher premiums are met. If your need for the protection exceeds 10 years, you should consider a longer guarantee such as a 15 or 20-year level term policy.
Features and Benefits of 10 Year Level Term Insurance
Most 10-year level term insurance policies have several valuable features and benefits including renewability and convertibility. Renewability means that even after the 10th policy year you can maintain the policy albeit at a higher rate. In other words, your coverage does not end after ten years. You have the option to “renew” the policy if you continue to pay the higher premiums beyond the end of the 10th year. Most all term policies are renewable to age 95. Convertibility refers to the ability to “exchange or convert” your policy, without proving your health, for a whole life, universal life or more permanent form of life insurance that will offer you a level rate for a longer period of time, usually your lifetime. This “conversion option” is extremely valuable if you become sick or are uninsurable. With a convertible policy, even if you cannot qualify medically for life insurance anywhere else, you can always convert your policy without evidence of good health. Finally, life insurance policy riders are available with most 10-year term plans. These additional policy options including children’s term insurance rider, waiver of premium rider and accidental death insurance may be available depending upon the life insurance company’s offerings.
Why Buy 10 Year Term Insurance?
There are many reasons to buy ten year level term insurance but it is most effective for short term needs. A great example is key man insurance for businesses. Many small to mid-sized businesses rely heavily on one or two “key people.” A business can protect the risk associated with the death of a key person by purchasing an inexpensive 10-yr level term policy on the life of the key person with the company being the beneficiary. Income protection is another reason to consider a 10-year level policy. Let’s say that you are 58 years old and want to retire at 65, you can buy a 10-year term policy and effectively protect your human life value or your income earnings ability over the next 8+ years. There are numerous other reasons to buy 10-year level term insurance but is most useful for needs that can be covered within a 10 year time window.
Ten year term life insurance is the most popular term insurance policy purchased today because of its affordability and guarantees. Ten year term plans provide great flexibility and can cover many different types of needs. For more information, click the following link to get a quick 10-year level term life insurance quote, or please contact MEG Financial toll free at 877-583-3955.