Insurance companies charge you premiums based on your
health and age. When you buy life insurance to cover you
for only a set number of years, the insurance companies
offer you different types of premium options to pay for
your coverage. This article explains some key words that
insurance companies use to characterize these premium
types. Understanding them is critical to recognizing the
possible cost and length of your coverage.

Life insurance companies expect you to live a certain
number of years, statistically. The longer your coverage
even if you maintain your health, the greater is your risk
of dying. Also the longer you hold coverage, the greater is
your chance of developing health problems that will also
increase your risk of dying. Recognizing this, insurance
companies contrive different premium types to protect their
liability and, perhaps, lower your current premiums
temporarily.

When you buy 'term insurance' you're paying for 'pure'
insurance. There's no savings or cash value component
associated with the policy. Its premiums (i.e. the payment
you make to own the policy) covers only the risk of death
and payment of the 'death benefit' during your coverage
time.

Many insurance companies offer level premium term
insurance. Premiums may remain level (i.e. constant) for a
period of 5, 10, 15, 20, 25 or even 30 years. These
policies are inexpensive and can provide relatively long
term coverage.

Some level premium term policies contain a guarantee of
level premiums; others don't. Without a guarantee, the
insurance company can surprise you by raising your premiums
(the amount you must pay to keep the policy in force), even
during the time you expected your premiums to remain level.
Make sure you understand the terms of your policy.

When considering which type of policy to use, you'll need
to familiarize yourself with all the terms and conditions
that the policies present. When you purchase insurance -
life as well as health or disability - you're obviously
interested in maintaining it until you feel that you don't
need it anymore.

You should understand some key terms pertaining to
insurance that have a direct bearing on maintaining your
police and reaping its proceeds. Four terms of particular
importance to them are:
* conditionally renewable,
* renewable,
* guaranteed renewable and
* non-cancellable.

A conditionally renewable policy means that you can renew
your policy but subject to the insurer's conditions. Here,
the insurer can cancel your policy if you've made too many
claims or, for some reason, appear to be a higher risk.
Under such a condition an insurer can drop you when you
need the coverage most. As an example, if you paid on a
conditionally renewable health insurance policy for 20
years without filing many claims, your insurer can drop you
when you turn 60 or 70 -- just when you're likely to need
more medical services.

A renewable policy allows the beneficiary to extend the
coverage term for a set period of time without having to
re-qualify for coverage. It's contingent on premium
payments being up to date. A life insurance contract having
a renewable term clause would be beneficial since future
health circumstances are unpredictable. Although the
initial premiums are likely to be higher than those of a
life insurance contract without a renewable term clause,
buying this type of insurance is often in the beneficiary' s
best interest.

A guaranteed renewable policy prevents the insurer from
unilaterally dropping you as long as you keep paying your
premiums on time. Virtually all health insurance policies
written today are guaranteed renewable. While
re-insurability is guaranteed, premiums can rise based on
the filing of a claim, injury, or other factor that could
increase the risk of future claims. Premiums can also be
raised on an entire class of insured people during the life
of a guaranteed renewable policy for health, life or
disability insurance. Most insurers offer both guaranteed
renewable policies and non-cancellable policies. If
premiums are similar for both a guaranteed and a
non-cancellable policy, the non-cancellable policy will
offer the double guarantee of re-insurability and locked-in
premiums.