Whether you’ve got a bigger house or more kids in your future, an increasing term policy can help ensure the money is there to help protect them.
Life insurance helps you protect your family financially, even if you’re no longer there. When you die, your life insurance company pays out a lump sum that your family can use to pay for day-to-day expenses, your funeral costs, leftover debt, or whatever else they need.
Term life insurance plans keep you covered for a set period of time, typically 10 to 30 years. Most term policies are level term, which means your premiums, or payments, and your death benefit stay the same year after year. In some cases, though, you may need an option where your coverage can grow over time to keep up with your changing financial needs.
With increasing term life insurance, your death benefit increases over the life of the policy. This type of insurance can provide extra protection as the years go by to cover growing expenses, like a new house or bigger family, or protect your death benefit from inflation. Keep in mind, though, that your payments are likely to increase along with your death benefit. Here’s a closer look at how increasing term works and if it’s right for you.
With increasing term, your coverage amount will rise by increments throughout the policy term, sometimes along with your premium rates. For example, if you choose a $250,000 policy with a 5% increasing term, your policy face amount will be $312,500 in five years.
These types of policies are less common than other types of term life policies, and can cost more than a level term plan because you gain a larger payout over time. When choosing a plan, consider your budget, current financial responsibilities, and future goals.
Saving for a new house or college tuition? Increasing term can help make sure the money is there when you need it.
Make sure your family is covered against rising costs, such as medical expenses.
With increasing term insurance, you can increase your coverage without having to reapply.
Like all term policies, increasing term is typically more affordable than permanent insurance and fits in many families’ budgets.
Increasing term could be a good fit if you want your coverage to keep up with expected increases in your income or expenses. With inflation always a concern for long-term coverage, increasing term also protects your financial investment for the future. Increasing term may be more expensive than other types of term life insurance, though, so it may not be worth it if you don’t expect your needs to grow over time. A life insurance agent can walk you through your options and help you find the right fit.
The difference lies in the death benefit, or the cash payout your beneficiary receives when you die. Unlike increasing term, where the payout grows over time, level term policies have death benefits and premiums that stay the same throughout the entire policy. One additional option is decreasing term life insurance, where the payout decreases over the life of the policy. Decreasing term rates are typically lower than other types of term insurance and can be a good way to help your family cover a mortgage or other debt that decreases over time.
If you still want to protect your death benefit from inflation, you may want to consider a level term insurance policy with an inflation rider. Adding this rider can help ensure the death benefit keeps up with rising costs over time. Talk with a life insurance agent about selecting the right coverage amount and rider options to protect your family.
At eFinancial, we’re committed to helping you find high-quality, affordable life insurance that meets your needs. We offer top life insurance products from more than 20 nationally recognized life insurance companies and expert, personalized support from our agents. We’re here to support you at every step in the process so you can find the right insurance plan as quickly as possible.
To get started, request your free, no-obligation online quote or call 800-957-9525 to talk with one of our agents.
