Traditionally, term life insurance covered a one-year period. Then the coverage was renewed, at a higher price. Recently, such policies have lost ground to level-premium term policies, which offer a fixed price for 5, 10, 15 years or longer.
In the first few years, level-premium term will have a higher premium than a term policy that’s renewed every year. However, annual renewable term premiums will go up every year so level-premium term may prove to be the better buy, over the life of a policy.
Level-premium term may prove to be the best choice if you need insurance for a specific time period. With two children, ages one and four, for example, you might buy a 20-year level-premium term policy. That policy will protect your family until your children are 21 and 24. By then, they may be finished with their college and making a living so they won’t miss your earned income, in case of your untimely death.