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What are the different types of term insurance?

There are two kinds. There's "annual renewable term," which gives you one year of coverage at a time that you renew annually, and "level premium term," which you buy for a specific multiyear period - say, five, 10 or 20 years.

Annual renewable term usually has the lowest annual premium to start, but the premium rises as you age. If your main concern is keeping your initial costs down - for example, because you think your earnings will rise significantly in the future - consider going with annual renewable term.

Level premium term lets you lock in the premium for that period; the annual premium is guaranteed never to change, from the first year to the last. That can be a smart way to insulate you from any premium increases. It's like the peace of mind you get from a fixed-rate mortgage compared to an adjustable-rate one.

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