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âSmallâ term life policies are available with under $50,000 in coverage, but policy amounts can go into the millions. Term life is typically sold in lengths of five, 10, 15, 20, 25 and 30 years. âLevel premiumâ term life means youâre locking in a price for the length of the policy. Typically you will pay a monthly or annual premium to keep the insurance in force. âAnnual renewableâ term life is a one-year policy that renews every year for a higher price.
The average duration of a life insurance policy is surprisingly short. The average life of an insurance policy is between 7 and 8 years, which is consistent with an average lapse rate of between 10 and 14% depending on the type of policy and the way the premium is calculated. The average life of an insurance policy is falling, and lapse rates are increasing. Lapse rates are higher: 1  after the first year claw back period ends. 2  where the policy is sold subject to an up-front commission agreement (the dominant agreement)  where the premium is stepped and is not level over the life of the policy.