When purchasing a term life insurance policy, there are two main types of policies you should consider. The two types are Annual Renewable Term Insurance Policy and the Level Term Life Insurance Policy. Having a clear idea of the two main policy terms will enable you to understand the best policy which should be considered for you and your family. Proper protection for the event of death is made possible with term life insurance. The choice between Annual Renewable Term Insurance and Level Term Insurance is a personal one and should be made with much thought and consideration after speaking with a knowledgeable insurance broker.

Annual Renewable Term Life Insurance is the simplest form of life insurance available. With a one year term, the policy will only pay out if death occurs within that year. The insurance company will base your premium on the likelihood of your death during the term of the insurance. These policies may be excellent stop gap measures for people in need of a short term solution to their insurance needs, but they are wrought with difficulties as well. The issue of renewing is the one that faces policy holders. The situation is that if you discover you are at risk eg through a rare illness, but do not die, then the insurer is unlikely to renew the policy. To make matters worse, you may not be eligible for any insurance because of your new condition. This is the risk you take when you purchase an Annual Renewable Term Life Insurance Policy. The policies are a good idea for families with low risk and low cash freedom because the chances of having to call on the policy are minimal.

A much more common form of term life insurance is the Level Term Life Insurance Policy. These policies will give you a set premium for the entire term.The terms of the policy can vary from 10 to 30 years, sometimes a bit more, and the premium levels are consistent throughout the policy term. This is typically more expensive than a renewable option.The policy is based on the risks of death for the entire policy term.  Simply put, while premiums in the first fives years of a 30 year policy may be relatively low because of a low risk of death, premiums for the final five years of the policy will be relatively high because of the higher risk. A Level Term Life Insurance Policy averages the premiums for each year of the policy and determines your premium amount based on this average.You may pay a higher premium, but it should never go up. As an added benefit, most Level Term Life Insurance Policies include an option to renew the policy.  This means that at the end of the term you can re-up your policy. In some cases, not all options to renew can be guaranteed. Some, but not all, insurers ask for a medical examination.