Typically the premium on term insurance is level for a certain number of years (e.g., 10, 20, 25 or 30 years – the specified period). These premiums are usually guaranteed not to increase during the level period selected. At the end of the level period, the premium increases each year. See the chart below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          After the level premium period, the premiums that the insurance company plans to charge are not guaranteed. The insurance company has the right to charge higher amounts provided those amounts don’t exceed a maximum premium level. Term insurance provides an affordable initial cost way to purchase life insurance. However, the increasing premium in later years makes term insurance impractical for meeting long-term life insurance needs. For needs that will last a longer period of time, whole life or universal life insurance should be considered. If the required premium is not paid by the due date, or within the allowable grace period, the policy lapses without value. The grace period for paying premiums is usually 31 days from the due date.

Term Life Premium Paying, Premium Paying