Guaranteed Issue Life Insurance

Q: What are guaranteed premium rates in a term life insurance policy?

A: With regard to premium rates, there are two types of term life insurance policies; guaranteed and non-guaranteed. Pretty creative, eh? The most common are guaranteed, and this is the type you want to look for. In fact, you won’t find as many life insurance companies offering non-guaranteed term life policies these days.

The guarantee means the premium rates will remain level for the entire term period (e.g. ten years, 20 years, etc.). With non-guaranteed policies, the premium rates may increase after a specified number of years, usually the first ten. For example, if you had a non-guaranteed, 20-year term life policy, the premium rates may only remain level for the first ten years. After that, the premium rates could increase each year for the remaining ten years of the term.

An important point to make is term life insurance policies do not technically terminate at the end of the term period. They can be renewed annually and kept in force beyond the initial term period, up to a specified age (usually 90-95). As such, they are considered ‘adjustable premium’ policies. All this means is the premiums can (and will) increase after the premium rate guarantee period expires. But don’t panic. As long as your term life insurance policy is guaranteed, your premiums will remain level for the entire term period.