Cost & Coverage
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Term life insurance is affordable and straightforward. That's why it's the right choice for most life insurance shoppers.
Term life insurance provides financial protection for your family in the form of a death benefit
It's the most affordable form of life insurance
Term life expires after a set number of years, when the "term" has ended
Term life insurance lasts for a set number of years (the term) before it expires and you’re no longer covered.
Why do you want a life insurance policy that runs out? Because you may not need that financial protection anymore, and you don’t want to pay for an unnecessary insurance policy.
That’s why term life insurance is worth it for a majority of shoppers. Learn more about why you should consider a term life policy and who it’s right for.
In this article:
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Life insurance is a good idea when you have a lot of financial obligations – i.e. kids, a mortgage, and other debt. Policygenius makes it easy to compare term life insurance policies to find one that covers all your needs. Term life insurance is particularly worth it because it’s the most affordable type of life insurance available that provides a tax-free lump sum of money for a financial safety net.
There are three components of term life insurance policy that you should know:
Term life insurance is the most cost-effect form of life insurance for the coverage you get. Other types, like whole life, can cost 6-10 times more than term life for a similar benefit amount.
Here are sample costs for a 20-year, $500,000 term life policy at different ages:
As you can see, life insurance gets more expensive as you get older, which is why it’s important to shop early and lock in lower rates.
Need help figuring how much a term life policy will cost you? Check our our free life insurance calculator.
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Term life insurance is considered the simple, straightforward flavor of life insurance. There are no complicated rules or investment components - which is good, because life insurance isn’t a good investment.
The alternative to term is permanent life insurance, which can cover you for your entire lifespan so long as you keep paying the premiums. But there are two things to keep in mind with permanent life insurance:
Term life insurance will be a better choice than whole life for most people. Whole life isn’t ideal because it’s more expensive and more complicated.
The other alternative is to self-insure, which means you’ve accumulated enough wealth to personally provide financial support to your dependents (or spouse, siblings, etc.) after your death.
In an ideal world self-insurance is the best because there’s no insurance to buy at all, but for most people it’s not a realistic alternative before your mid-50s at least—after you’ve built up some savings, sent the kids off to school, paid off your mortgage, hit your peak salary, etc.
|Basic Term Life||Basic Whole Life||Universal Life||Variable Life||Variable Universal|
|Guaranteed Death Benefit?||Yes||Yes||Yes||Yes||Yes|
|Guaranteed Cash Value*||No||Yes||Protected from risk, but can be depleted to pay premiums||No||No|
|How Cash Value Grows (or Shrinks)||N/A||Earns interest at a predetermined fixed rate||Variable rate determined by the insurer||Subaccounts - pool of investor funds offered by the insurer||Subaccounts - pool of investor funds offered by the insurer|
|Premiums||Can increase periodically OR be guaranteed level for the duration of the policy||Level||Varies, up to the customer (subject to federal tax laws)||Level||Varies, up to the customer (subject to federal tax laws)|
|Notes||No risk of losing coverage, but no cash value when term ends||No risk compared to other permanent types, but you can probably find better investment options elsewhere||N/A||Risk of ending up with expensive insurance policy with little to no cash value||Risk of ending up with expensive insurance policy with little to no cash value|
*All permanent policies can be surrendered for their current cash value after a certain number of years, at which point the insurer will pay the accumulated cash value minus any loans and fees.
Learn more about the different types of life insurance.
If you have anyone who is financially dependent upon you, and you don’t have enough money set aside to provide for their financial needs should you die tomorrow, then life insurance is absolutely worth it. It should be your top insurance priority. And since term is cheaper and simpler than permanent, it’s easier to fit it into both your present-day budget and your long-term financial strategy.
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Yes, we have to include some legalese down here. Read it larger on our legal page. Policygenius Inc. (“Policygenius”) is a licensed independent insurance broker. Policygenius does not underwrite any insurance policy described on this website. The information provided on this site has been developed by Policygenius for general informational and educational purposes. We do our best efforts to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Savings are estimated by comparing the highest and lowest price for a shopper in a given health class. For example: for a 30-year old non-smoker male in South Carolina with excellent health and a preferred plus health class, comparing quotes for a $500,000, 20-year term life policy, the price difference between the lowest and highest quotes is 60%. For that same shopper in New York, the price difference is 40%. Rates are subject to change and are valid as of 2/17/17.
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