Jan. 8, 2007

What is an "annual decreasing term to age 65" policy? What is a "level term to age 65" policy?

G. Jackson, Texas

Dear G. Jackson,

A decreasing term policy is a term life insurance policy that lasts for 10, 20, or 30 years, with the premium payment and amount of coverage decreasing each year. It is not renewable at the end of the term.

A level premium term policy is one for which the premium rate remains constant for the life of the policy. Typical life insurance premiums increase as the policyholder ages, because your risk of dying increases with each passing year. Level premium policies allow you to lock in a premium rate at the beginning of the term that will not change from year to year.

"Term to age 65" means that the policy is in-force until the policyholder turns 65. The idea here is that the policyholder will be insured during his or her most productive working years.

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