Life insurance is essential to protect your family’s financial future even after your death. Term life insurance plans provide coverage for a specific period, ranging from 10 to 30 years. Most term policies have level premiums and benefits that remain the same throughout the policy term. However, if you need coverage that increases over time, you can opt for increasing term life insurance.
Increasing term life insurance is a type of policy in which the death benefit increases over the policy’s term. This coverage option provides additional protection over time, allowing you to cover growing expenses like a new house or a bigger family. The coverage also protects your death benefit from the effects of inflation. However, it is essential to note that the premiums increase along with your death benefit.
Here is an example to understand how increasing term life insurance works. Suppose you choose a $250,000 policy with a 5% increasing term. In five years, your policy face amount will increase to $312,500.
Increasing term life insurance is an excellent option if you want your coverage to keep up with expected increases in your income or expenses. It is typically more affordable than permanent insurance and fits within most families’ budgets. However, it may not be worth it if you don’t expect your needs to grow over time.
Increasing term life insurance may cost more than other types of term life insurance because it provides a larger payout over time. Before choosing a plan, consider your budget, current financial responsibilities, and future goals. You can consult a life insurance agent to help you decide which plan is right for you.
Comparing Increasing Term Life Insurance with Other Types of Term Life Insurance
Unlike increasing term life insurance, level term policies have death benefits and premiums that remain the same throughout the policy. Another option is decreasing term life insurance where the payout decreases over the policy’s life. Decreasing term rates are typically lower than other types of term insurance and can be an excellent option to help your family cover a mortgage or other debt that decreases over time.
If you want to protect your death benefit from inflation, you can consider a level term insurance policy with an inflation rider. This rider ensures that the death benefit keeps up with rising costs over time.
Increasing term life insurance is an excellent option if you want to ensure your coverage keeps up with expected increases in your income or expenses. It is more affordable than permanent insurance and fits within most families’ budgets. However, it may not be worth it if you don’t expect your needs to grow over time. Consult a life insurance agent to help you decide which plan is right for you and your family.
|Provides extra protection over time||More expensive than other types of term life insurance|
|Protects your death benefit from inflation||Premiums increase over time|
|Allows you to increase coverage without reapplying||Less common than other types of term life insurance|
|Fits within most families’ budgets|
- Searcy Financial Services. Increasing Term Life Insurance - Policygenius
- Bankrate. Increasing Term Life Insurance - Resources
- Policygenius. What Is An Increasing Term Life Insurance Policy?
- EFINANCIAL. What Is An Increasing Death Benefit In Life Insurance?
- Northwestern Mutual. Term Life Insurance: What It Is, Different Types, Pros And ...