Can a 20 year term life insurance increase their premium after 10 years?
I bought a 20 year term life insurance with payment that I assume should be the same monthly for 20 years. When I received my Life Insurance Policy, it says my Initial Term Period is 20 years, but my Guaranteed Level Premium Period is 10 years. The policy also contains a "Schedule of Maximum Annual Premiums by Year" where it states that my maximum total annual premium is the same for 10 years, but goes up every year in the 11th year forward. When I asked the agent about this, he says it is standard that the insurance company has the right to increase my premium after 10 years, but they hardly ever do that. Is this true, or am I being hoodwinked? Thanks!
March 4th, 2010 at 1:12 AM
RIght. You’ve answered your own question.
You bought a 20 year term policy, but the premium was only guaranteed, for the first ten years. It WILL go up every year after that.
If you had bought 20 year LEVEL term, the premium would have been the same, guaranteed, for all 20 years.
It’s standard for the product you BOUGHT. Me, I wouldn’t buy that product. I’d want my premium guaranteed for all 20 years. Me, if I were in your shoes, I’d start shopping around, and see what I could by 10 year level term for, or even 15 if you think you might want it a bit longer than 10 more years.
March 4th, 2010 at 1:12 AM
Yes. You’re being hoodwinked. That is a 10 year guaranteed term policy with a 20 year term. It may even just be a 10 year term policy. I’d have to see the face of the policy to tell you for sure. If it is not significantly cheaper than a real 20 year term would be you should turn it back in during the free look period. If you’d like some quotes to compare it against I can show you what the rates on a normal 20 year would be, I just need your age, sex, if you smoke or not, and what the face value of the policy is.
March 4th, 2010 at 1:12 AM
Sounds like that company had a pretty savy marketing team. If it states in the policy contract that it goes up, then that’s how it works. There are some polices like this and some that are gauranteed for 20 years to be level as well. Depends what you buy…