Host: What is Term Insurance?
Bob Ley: One type of coverage is Term Insurance. You are buying life insurance coverage that last for the set period of time, provided you pay the periodic premium. Annual renewable term is purchased year by year, although you don't have to re-qualify by showing evidence of good health each year. This is the least expensive type of life insurance initially but rates increase every year. Level premium term has some what higher but fixed premiums for longer period, typically from five to 30 years or more. There is a new type of Term Insurance available called Return of Premium Term. With this plan the accumulative premiums paid on the policy during the level term period, 15, 20, 30 years, not including any substandard and rider charges, will be paid to you at the end of the Level Term period if a policy is then enforced. The premium return does not take into account any time value of money. Beginning the sixth policy year, a portion of accumulative premiums will be returned if you choose to surrender the policy. Electing this plan versus basic level term increases your periodic premium.