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A Guide to Annual Renewable Term Life Insurance

A Guide to Annual Renewable Term Life Insurance

Life insurance is important for everybody to have, but with all the kinds of life insurance available, choosing one that works for you can be difficult. Sorting out the terms, prices, options, and then factoring in your own insurability makes shopping for life insurance a necessity that many avoid confronting until it’s too late. Without life insurance, you risk leaving your family with debt, and often without a primary source of income if you die. The best way to protect against that is through purchasing life insurance. And one great option for those who are just starting out is to begin with annual renewable term life insurance.

Annual renewable term life insurance is a life insurance plan that is purchased for the period of one year. The policy renews each year with a new reassessed rate. This form of life insurance is usually the cheapest form of life insurance, especially for young individuals, because the likelihood of the policy owner dying in the early years is low. However, as the years go on, the policy gradually gets more and more expensive. Because of the affordability, this type of insurance is great for young families who are young and just starting out in life, and therefore less financially well off, but whom want life insurance just in case.

If annual renewable term life insurance is the type of life insurance that you feel best suits your family, whether because of affordability or convenience, it’s important to remember that you should reevaluate your life insurance periodically. Because annual renewable term life insurance renews each year, and recalculates your rate, you may find yourself suddenly paying a much higher price after a surgery or other medical health issues.

For this reason, as you get older, it quickly becomes important to have a term locked in for as long as possible to avoid rapid cost increases. Having a locked in term also prevents you from being dropped from your policy for becoming uninsurable, as can happen with the renewal of your annual renewable term life insurance.

Now, renewable term life insurance is almost as affordable for young families as annual renewable term life insurance. The difference between the two is that while annual renewable term life insurance renews each year, renewable term life insurance renews and reassesses after a different length of time. This can range from 3-10 years, and sometimes up to 30. And the plans on the shorter end can cost as little as $50 more per year than it’s annual counterparts. Another option is permanent life insurance. This is generally far more expensive than annual renewable term life insurance is, but it pretty much locks in your price and guarantees coverage should the policy holder pass on. These tend to be a much better investment for those with a large family or those who are getting up there in age.

Regardless of what kind of life insurance you opt for, it’s important to remember that if you don’t have it when you need it, you could end up leaving behind a huge burden for your children or family. In many cases, buying a secure life insurance plan is one of the best ways of providing ongoing protection for your family, even when you can’t be there to protect them yourself.

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