Term Life Insurance

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What is Term Life Insurance?

Term life insurance is a kind of life insurance policy that covers you for a set period of time—not your whole life—and pays out a lump sum of money to your beneficiaries if you die while the policy is in effect. Term life insurance is the simplest and most affordable form of life insurance, and is often the best type of life insurance policy for most shoppers. Unlike whole life insurance policies, which can be complicated and expensive, term life insurance quotes are easy to understand and offer the cheapest rates on financial protection for your loved ones. There are several types of term life insurance, which we’ll describe below.

How It Works

  1. Term life insurance lasts a set amount of time. Policies are usually sold in 10, 20, or 30-year terms.
  2. You’ll make monthly or annual payments, called “premiums,” to keep the policy in force.
  3. If you die while the policy is in force, a pre-set cash payment called a “death benefit” will be paid out to whomever you name as a beneficiary. The bigger you want this payment to be, the more your premiums will cost.
  4. At the end of the term, the policy expires and is no longer in effect.

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Term Life Insurance Overview
Duration1-30 Years
Guaranteed Death BenefitYes
Guaranteed Cash ValueNo
How Cash Grows (or Shrinks)N/A
PremiumsCan increase periodically OR be guaranteed to remain level
Notes No risk of losing coverage, but no cash value when term ends



Cost of Term Life Insurance

Since term life insurance protects your family for a set period of while they’re still depending on your income and not for your entire life, term life insurance rates are much cheaper and offer more affordable financial protection than permanent policies like whole life.

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20 Year Term 30 Year Term
$100,000$9/ mo | $105/ year$13/ mo | $155/ year
$250,000$13/ mo | $150/ year$20/ mo | $240/ year
$500,000$21/ mo | $240/ year$34/ mo | $387/ year
$1,000,000$37/ mo | $425/ year$60/ mo | $695/ year

Methodology: Sample based on lowest cost average from top carriers for a 30 year-old male in highest health classification in the New Jersey area.


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Pros and Cons of Term Life Insurance

Reasons to buy term life insurance

  • Protect your family from debts such as mortgage, student loans, etc
  • Create a retirement fund for your spouse
  • Pay for your children’s college tuition and other long term costs
  • Cover short term debts and needs that arise in your absence

What term life insurance won’t provide*

  • Coverage that lasts your entire life, or into old age
  • A savings plan that invests your monthly premiums over the life of the policy
*For coverage that lasts your entire life or for a cash value savings plan you'll need a permanent policy like whole life. However there are many reasons why whole life is the wrong choice for most shoppers. See our full analysis on whole vs term life insurance.

Best Life Insurance Companies for Term Life Insurance

Here are some of the best companies offering term life insurance through PoicyGenius, along with ratings from J.D. Power, A.M. Best and the Better Business Bureau. They all meet the highest standards of excellence with decades of service.


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CompanyBBB RatingA.M. Best RatingJD Power RatingCompany ReviewsQuotes
Principal FinancialA+A+774Read moreGet quotes
Mutual of OmahaA+A+766Read moreGet quotes
Lincoln FinancialA+A+744Read moreGet quotes
ProtectiveA+A+742Read moreGet quotes
John HancockA+A+739Read moreGet quotes
TransamericaA+A+719Read moreGet quotes
AIGA+A718Read moreGet quotes
BrighthouseA+A+N/ARead moreGet quotes
Banner LifeA+A+N/ARead moreGet quotes
Pacific LifeA+A+N/ARead moreGet quotes
SBLIA+A+N/ARead moreGet quotes
PrudentialAA+770Read moreGet quotes

Types of Term Life Insurance

A straightforward term life insurance policy in which your premiums are guaranteed to remain level over the course of the term.

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Offers you a money-back guarantee on your term life insurance: If you outlive the policy, the premiums you have paid over the life of the policy will be returned to you.

Most life insurance applications include a medical exam to help the carrier assess your risk of dying during the term of the policy. No medical exam policies, such as simplified issue or accelerated underwriting life insurance, will allow you to skip the medical exam if you qualify.

Mortgage life insurance is intended to pay for your home if you die during the course of the policy. This insurance mirrors the amount you owe on your mortgage, which declines over time. Usually offered at 15 and 30 years, the death benefit declines gradually and expires when you pay off your loan.

Other Types of Life Insurance

Aside from term life insurance, the other main type of life insurance policy is called permanent life insurance. Permanent life insurance lasts your whole life and doubles as a kind of savings account that eventually passes to your beneficiaries at the end of your life. There are a variety of permanent life insurance policies such as whole life insurance, universal life insurance, and variable life insurance—and even combination policies like variable universal life insurance.

Permanent life insurance policies are many times more expensive than term life insurance policies and come with complicated rules that may make them a bad investment choice for most life insurance shoppers.

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