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Life Insurance PPO Rider
Most term insurance contracts from the major life insurance companies offer a plan called PPO Rider. This allows you (for a small additional cost) to "up" your insurance coverage without new underwriting. Generally, you can up your coverage at 7 or 9 year intervals (at certain ages) and during the major life changing events such as getting married, buying a new home or having kids.
Example: You purchase a 200K policy, then at designated intervals, you have the option to add more. In many cases, you can double your original coverage over time. Underwriting and contract placement is done once.
If you are a "term person" go for the longest term possible. It seems more expensive at first look, but that's because coverage will extend into some very expensive insurance years on the back end. The longer term just spreads the total costs out more evenly so you can still afford insurance for these later years. Be sure you purchase your term from a company that will allow you to convert to permanent insurance. You may never want/need to convert, but it is very important to keep this option open.
The Universal or Whole Life policy with term rider is a good way to go, but the riders on these policies are usually 5 year term. So in order to avoid the rapid premium increases associated with 5 yr term, you do the conversion "backwards". Start with a 20 or 30 year term policy and convert it into permanent insurance as you start realizing a need for permanent insurance. By starting with the long term policy, the conversion will come in the form of two seperate policies, a permanent policy for the converted amount and a modified 20 year term policy. These 2 policies together will be treated as one by your insurer (death benefit limits, premiums, insurability, PPO etc.). This way the integrity of your 20 yr term contract will be intact.
Keep in mind, on a 20 year term policy, guaranteed convertability is usually only applied to the first 10 years of the term contract (by the way, so are the guaranteed level premiums).
Be sure to have the PPO rider added. It's not automatic, so ask your insurance professsional about it.
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