Term life insurance is an affordable and straightforward option for many people. You pay premiums every month and the coverage lasts for the term length, which can be 10, 15, 20, or 30 years.
Of the many costs that come with getting older, life insurance can seem like a burdensome one. However, it doesn’t need to be. There are multiple types of life insurance out there, including two important types of term life insurance: level term policies and renewable term life insurance.
When asking oneself whether term life insurance gets more expensive as one gets older, the answer is that it depends on which type of term insurance is purchased. So, let’s explore the difference between level term and annually renewable life insurance to help you make the right coverage decision for yourself and your family.
What Is Level Term Life Insurance?
Level term life insurance is when someone purchases a life insurance policy with set premiums. This means that the rate is locked in for the amount of time agreed upon, whether it be 10 years or 30 years.
Despite inflation and other price fluctuations throughout the length of time, the purchaser can still expect to pay that initial price for the policy until its end date.
The benefit of term life insurance is that a household can budget for that cost indefinitely and not have to worry about shifting prices. However, when the policy ends, renewal may be possible but only for a higher rate than the initial policy premium.
What Is Renewable Term Life Insurance?
Renewable term life insurance coverage can be renewed when the term expires, typically in one-year increments. Premiums can be expected to increase with each renewal period. So, what someone pays at 30 when taking out their policy will be much less than what they are paying for that same policy at 60.
In the end, renewable term life insurance can cost more than level term life insurance as the plans reach equilibrium and renewable eventually passes level term rates, continually rising as one ages.
But, renewable term life insurance can a better option for someone looking for shorter policy lengths.
So, Does Term Life Insurance Get More Expensive?
Overall, yes, but to varying degrees. Whether a person is opting for a level or renewable policy, the prices will rise at one point or another. In the case of a level-term life insurance policy, a person can expect their premium to increase after their initial term expires.
However, during that term, the price will stay the same. On the other hand, renewable life insurance will continue rising annually with each renewal period, and what someone pays one year can look very different from the price they pay the following year. If purchasing a renewable term policy when young, the price will grow significantly as a person gets older.
The Bottom Line
Term life insurance premiums will likely increase over time in one form or another. To help minimize the price increase, a person may want to opt for the level term policy so that their premium amounts stay the same for the entire duration of that policy and as they get older.
Fidelity Life offers term life policies and makes it easier for people to get them. Applicants can provide information to help match them with a life insurance policy that meets their needs. They can select a policy and get a quote online or with the help of a licensed agent. Fidelity Life will then guide the applicant through the application and purchasing process.