When I first started in the life insurance industry in 1985, there was really only one type of term insurance policy available- ART, or “Annually Renewable Term” insurance. Of course we had whole life insurance and the new “Universal Life” insurance, but those policies were typically more expensive and used for different purposes than buying the most affordable life insurance to provide maximum value for families.
ART policies featured premiums that started out low and increased each year at renewal time. Imagine a 45 degree angle where the left hand axis is the premium payment and the right hand axis is time and you’ll understand that ART policies become unaffordable pretty quickly. These policies were used as an entryway to longer term products, most notably whole life insurance, which features high premiums, but builds cash value over a period of time. You could switch into these whole life policies without proving good health, a feature called a “conversion option”.
In the late 1980’s insurance companies began to understand that it would be wise to create term insurance policies that didn’t require increased premiums each and every year. I remember the first level premium term policy I saw was a three year level premium term insurance policy and that seemed SO revolutionary! It made sense that policyholders would want to keep term insurance instead of expensive whole life insurance, especially here in Palo Alto or the Bay Area, where housing prices and incomes were rising very quickly and folks realized that they needed larger and larger amounts of term insurance to replace the income of the main breadwinner or to pay off a large mortgage at death.
So, after the history lesson, you’re asking, “ok, so what kind of life insurance should I buy”? Well, since you’ve probably searched for life insurance in Palo Alto, or maybe life insurance broker in Palo Alto, then it’s fair to say you live in the Bay Area, or California. If that’s the case, then I firmly believe that you should buy the most cost-effective term life insurance possible! You can go to the Get EZ Term Quotes button at the bottom of this page to check rates and discover just how easy and fast it it to get covered!
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