As a senior citizen thinking about their own future and well-being of their family, you can easily get confused and discouraged by the amount of life insurance options available today. To make things worse, the language that insurance companies use is often either misleading or complex.
Even though they offer a wide range of different variants of life insurance in Michigan, we will do our best to explain the three main types and policies that would be suitable to those aged 55 or older.
They are called level term, convertible, and renewable.
Level Term Life Insurance
With level term life insurance, you get a policy in which both a so-called level death benefit and a level premium are clearly specified. However, the amount of money you’ll have to pay and the amount your beneficiaries will receive will both depend on how long you’ll be able to cover your annual premium.
The actual math is not so complicated, though:
If you buy a 10-year term life insurance policy, for example, and if the specified death benefit is, say, $100,000, then that’s how long you’ll have to pay your premiums for, and how much your beneficiaries will receive. Premiums will get higher as you grow older, and you may renew the policy when it expires.
Convertible Term Life Insurance
An expired level term life insurance in Michigan has no cash value, but it can be renewed or extended for a couple of years more. But if you choose a convertible term life insurance policy, then you’ll be able to switch to permanent insurance before you turn 70 or a couple of months before your policy expires.
Annual Renewable Term Insurance
Unlike level and convertible term insurance policies, ART, or annual renewable term insurance, allows you to renew your policy every year. As such, ART is particularly convenient for elderly citizens who need coverage only for a short period of time. This policy, however, works only for less than 5 years.
Also, bear in mind that annual renewable term insurance policies are by rule more expensive than other options. Most insurance companies will give you a quote in advance but expect your premiums to increase every year nevertheless. In most cases, you won’t have to re-qualify for the annual policy.
For more information on life insurance policies in Michigan, contact the professionals at Melton McFadden.