Protect your loved ones with term life insurance.
Term life insurance is the simplest and most affordable way to protect your loved ones financially if you die. It’s a type of life insurance that provides coverage for a specific term length.
You can get a quote in just minutes and choose a policy that fits your needs and budget. Plus, many policies offer accelerated underwriting – we make it easy to get you started.
Get an instant, no-pressure quote for term life insurance today!
What is Term Life Insurance and How Does it Work?
Term life insurance provides a death benefit if you die from natural causes, health issues, or accidental death.
With term life, you choose a level term period between 1-40 years.
During the term period, your premium and death benefit remains fixed.
When the level term period ends, your life insurance is still there but:
- Premiums will increase annually
- The death benefit may/may not decrease
At death, most term policies payout in a lump sum, but other life insurance settlement options exist.
Term life is a great type of insurance to consider when you want the most coverage for the lowest price.
How Long is Term Life Insurance For?
When it comes to term life, there is no one-term-length-fits-all answer.
The duration of coverage depends on your specific needs and situation.
Life insurers offer many term lengths, including:
- 1 Year Term
- 5 Year Term
- 10 Year Term
- 15 Year Term
- 20 Year Term
- 25 Year Term
- 30 Year Term
- 35 Year Term
- 40 Year Term
One life insurer, AIG offers additional term lengths of 16 – 30 years in one-year increments.
Your policy becomes an annual renewable term policy at the end of the level term period.
And while most policies allow you to renew up to age 90-95, the price jumps up dramatically, and/or the death benefit decreases to a fraction of the original policy.
Bottom line – Choose your term length carefully because you won’t keep the policy when the term ends.
How to Choose the Right Term Length
When you buy a new policy, it’s important to choose the right term length because you can’t change it later on.
Consider these points before choosing your term length:
- Match your term to the duration of time you need coverage
- Maybe buy multiple term lengths if your needs vary
- Consider terms slightly longer than your expected need
- Don’t forget that price increases with longer terms.
If you have a mortgage, consider a 30-year term to match.
You can buy multiple policies with different term lengths or one policy with term life insurance riders to accomplish the same.
Are you looking for coverage to replace your income?
Plan on retiring in 15-years? Take a look at 20-year terms as well in case you keep working.
If you need a quick overview of the entire term life insurance application process, we recommend our Life Insurance for Dummies guide.
A term life insurance conversion privilege allows you to exchange your term policy for universal or whole life insurance.
While term conversion is rarely used, it’s important to have it in the event you develop health issues.
The reason why is that you don’t need to go through medical underwriting again.
Some companies offer conversion for the entire level term period, while others limit the conversion period available.
If you will be a senior by the time your level term ends, pay attention to the conversion privilege in case you need it.
Most term life policies offer riders that provide additional benefits such as child coverage, accelerated benefits, etc.
For detailed information, check out our guide – Life Insurance Riders
Group Life vs. Term Life Insurance
There really is no comparison.
Term life is owned and controlled by you, while group life is controlled by your employer.
Leave your job or lose your job and you lose your group coverage.
No big deal, right? If you developed a significant health issue, you may have problems.
When comparing term life insurance quotes vs. group life insurance, look at the pros and cons of each.
Group life insurance Pros vs Cons
|Easy Application Process||Rate increases every 5 years|
|No Health Questions for base coverage||Additional coverage requires medical review.|
|Paid for by employer||Employer may cancel the plan.|
|Coverage amount may increase with salary||If you leave the job you could lose coverage.|
|Some policies may be portable if you leave||Some policies may not be portable if you leave|
|May allow conversion to permanent insurance||Permanent policy pricing not favorable|
Term Insurance Pros vs Cons
|You have 100% control over policy||Underwriting takes 6-8 weeks|
|Premium is fixed for the term length chosen||A paramedical exam may be required|
|Conversion options more favorable||Health issues may be costly|
|Pricing more favorable at greater coverages||–|
With group life insurance, the base amount given to employees for free is a great deal and should be accepted.
As soon as you look at supplemental group life insurance, consider an individual term life insurance policy.
While not a group policy. Costco term life insurance is available to members.
Term Life vs. Universal Life Insurance
Universal life insurance is permanent life insurance that has the potential to accumulate cash values.
There are many variations of universal life insurance available including:
- Index Universal Life
- Guaranteed Universal Life (GUL)
- Cash Value Accumulation Universal Life
- Survivorship Universal Life
A guaranteed universal life (GUL) on the other hand works similarly to a term life policy.
Mortgage Life Insurance or Term Life
When comparing term vs. mortgage life,
The premiums for both policies remain level for the duration of the term.
The difference has to do with the coverage amount and how it gets paid out.
Mortgage life insurance coverage decreases each year with your mortgage, but your premium remains level.
If you die, the death benefit gets paid directly to the mortgage company.
A term life insurance policy on the other hand has a level premium and death benefit.
Furthermore, the proceeds get paid to the beneficiary you name.
For other loans such as a business loan, a level term life with a collateral assignment is used to ensure the bank only receives what is owed, with the balance to your beneficiaries.
Term Life Insurance vs. ROP
If you like the idea of getting money back from your term life, an ROP – Return of Premium policy may be a good fit.
With the ROP term, the life insurer refunds all premiums you paid at the end of the term.
ROP may sound like a good deal (and it can be at times) but keep in mind that your ROP will be more expensive.
Underwriting for most life insurance policy types is similar, although some policies allow you to skip the life insurance medical exam.
Term life insurance is temporary, providing coverage for a specified duration of time, while whole life insurance builds cash value and has the potential to last a lifetime.
No, term life insurance does not have a cash value. Some term life policies offer a return of your premium if you cancel the policy.
Group term life insurance is the coverage offered by your employer. Most employers have a base amount of life insurance offered to all employees, and a supplemental amount that employees may purchase.
You may be able to sell your term life insurance policy if you are older (age 65+), the policy has a conversion privilege available, and your health has declined. It’s called a life settlement.
Term life insurance is not taxable for most situations. There are some instances (typically for business insurance cases) where they may be a tax question. Always consult your accountant for tax advice.
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Michael Horbal is the founder and owner of RiskQuoter.com and a licensed life insurance agent who has helped thousands with affordable protection for families and businesses.