15 Year Term Life Insurance Level Term Life Insurance

When you purchase a 15 year term life insurance policy you enjoy level insurance coverage for the entire 15 year period…with most of the more progressive life insurance companies. There are other life insurance companies that allow you to start off your policy with a premium that is a little lower than usual but it increases after 5 years and may increase again at the 10 year point. If you were to average out the premiums over the 15 year period you would more often than not find that it would work out to be a little more than the premium for the policy with the level premium. Here is why.

With the 15 year term life insurance policy as with any life insurance policy the actuaries anticipate how long an insured person will live if the policy is bought at a given age. They determine this by taking into consideration many variables too complex to discuss here. The premium for the 15 year term life insurance policy is an average of what the insurance cost is for a given amount of insurance over a 15 year period. If you give it some thought you will realize that you pay more than is necessary in the initial years. Because they are collecting more than is necessary they have a little extra to invest. Since these investments usually turn some sort of profit they can set the premiums at a lower rate.

In the situation where a lower premium is charged for the first 5 years with an increase every 5 years there is much less to invest so they have to make up the cost in the later years.

Why would someone buy 15 year term life insurance?

• Applying The Policy To Family NeedsAlthough you always knew you needed to buy life insurance for the protection of your family you never seemed to get around to it. It may be that before now you simply could not afford to pay a life insurance premium. You now have a child that is 5 years old. You know you want to make sure that there is sufficient money to take care of your son or daughter until s/he graduates college. A 15 year term life insurance policy may be sufficient for that purpose or you may choose to buy a 20 year term policy. If you can afford to lay out a little more cash it may be wise to purchase a 30 year term policy.
• Funding Buy-Sell AgreementsBusiness people sometimes use the 15 year term life insurance policy to fund buy-sell agreements in the event of the death of a partner or a stockholder in a corporation. Upon the death of a partner or stockholder the face amount of the policy, the 15 year term life insurance policy in this case, is paid to the partnership or corporation. The money is used to purchase the deceased shareholders stock or shares from his or her heirs. The price is predetermined by the agreement.
• Key Man Or Key Employee InsuranceIf a business has a valuable employee it makes good business sense for the business to buy a life insurance policy on the life of this key employee in case he or she should suddenly die. The money would be used to offset costs and possible losses while the business searches for a replacement. The 15 year term policy can be effectively used for this purpose.If the owner of these policies wish to continue after the 15 year period they may convert to a permanent policy . One of the favorites is the universal life policy. Some companies give a deadline within which the policy should be converted…usually about 12 years.
• Waiver Of premium RiderAn inexpensive and valuable rider you can add to your 15 year term life insurance policy is the waiver of premium rider. Anytime during the life of the policy if you became disabled you would not be required to pay any premiums for as long as you are disabled…even if it is for the rest of your life. You must be disabled, however, for a minimum of 6 months. Upon your return to work you pick up your premium payments again. You owe nothing for the premiums you did not pay while you were disabled. Had you died while you were disabled, and not paying the premiums, the death benefit would be paid to your beneficiaries just the same.
• Accidental Death Benefit RiderThe accidental death benefit rider, sometimes referred to as the double indemnity rider, can also be added to your 15 year term life insurance policy at a small additional cost. If you died in an accident the life insurance company would pay double the face amount of the policy to your beneficiaries.