10 Year Term Life Insurance
When people speak of 10 year life insurance they are usually referring to 10 year term life insurance.
Some companies sell a 10 year endowment policy but these policies are no longer popular because of their cost.
With the 10 year endowment you would lay out more in premiums than you would for whole life insurance policies.
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10 Year Life Insurance Policy
10 year term is pure insurance with no cash value accumulation or dividend eligibility. The premiums for this affordable life insurance policy usually remain level for the full 10 year period.
The death benefit also remains level and is paid out free of income taxes at the death of the insured…unless you make your policy proceeds part of your Estate. It is usually best to name a beneficiary.
Some companies allow you to renew the policy after the initial 10 year period but they usually require evidence of insure-ability. You may need a medical examination.
The policy may be renewed every 10 years thereafter with an increase in premium.
In some companies the policy is not renewable after the initial 10 years…but the policy has a conversion privilege that enables you to convert to a permanent policy within the 10 year period.
10 year life insurance is specifically designed for the person who has a temporary need for life insurance.
It is used by business people to cover outstanding loans, to fund buy-sell agreements in the event that a partner or shareholder dies in the initial years of a new business, or for key employee life insurance.
It is also used by young people who are short of cash and are aggressively saving or investing…may be to buy a house or for an anticipated addition to the family…a new baby.
It therefore applies to the person who has a short term need for life insurance.
Usually the 10 year life insurance policy can be converted to any permanent life insurance policy at any time during the life of the policy. Some life insurance companies limit the conversion period to about 8 years.