Term life insurance

A term life insurance policy delivers affordable financial protection to your family and gives you peace of mind. Unlike permanent life insurance, which lasts for the rest of your life and comes with a cash value, term life is easy to manage and cost-effective. Because of low pricing and simplicity, a term policy is the best kind of life insurance for most people.  If you’re ready to shop for life insurance, you don’t have to do it alone. We can help you find the most robust coverage for a competitive price.

What is term life insurance?

Term life insurance works by guaranteeing financial protection for your family over a specific period — the term — before expiring. If you die before the term ends, your beneficiary receives a death benefit, a tax-free lump sum of money that can be used to cover funeral costs, bills, or any other expenses.

Terms usually last from 10 to 30 years and you pay a monthly or annual premium, which is determined using your policy details and your health and demographic information. This is different from permanent life insurance, which lasts for the rest of your life and comes with a cash value. 

People often choose term over whole life insurance because it’s affordable and straightforward. You can choose your term length and coverage amount so you don’t pay for more financial protection than you need. And unless you have a unique financial situation or lifelong dependents, going with term life insurance will make more sense. 

How much does term life insurance cost?

Term life insurance rates are determined by your age, health history, hobbies (risky activities can cost you), coverage amount, and term length. If you add riders to your policy, that will also impact how much you pay.

Average monthly premiums for a 20-year term life insurance policy

→ Learn more about term life insurance costs

How much insurance do you need?

When deciding how much term life insurance you need, you should factor in outstanding debts, future costs, dependents, and end-of-life expenses. Your policy should last as long as your longest debt (such as a mortgage) and should cover any remaining costs when you subtract your debts from your existing assets.

→ Learn more about how much life insurance you need

Types of term life insurance

While traditional term life insurance, also called level term life insurance, is the most straightforward type of life insurance and the right one for most people, there are some variations of term life that might be a better fit for your needs. These include:

• No-medical exam term life insurance: Allows you to skip the life insurance medical exam and still receive coverage

• Annual renewable term life insurance: Renews on a year-by-year basis; premiums usually start lower than a standard term life policy and increase each year

• Decreasing term life insurance: Premiums remain the same, but benefit amount decreases each year

• Group term life insurance: Offered through the workplace and often subsidized, but not portable from employer to employer. (So if you have life insurance through your employer and then go to a different job, that life insurance will not be active any longer)

• Mortgage protection insurance: Decreasing term insurance where the beneficiary is your mortgage provider and the term and benefit amount are tied to your mortgage length

• Return of premium term life insurance: Allows you to get your premium payments back at the end of the term

• Increasing term life insurance: Can have set or varying premiums, depending on the insurer; the death benefit amount grows over the life of the policy 

Term life insurance vs. whole life insurance

Most insurance shoppers will ultimately decide between buying term life insurance or whole life insurance.

Here’s a quick comparison guide:

Does term life insurance expire?

One of the benefits of term life insurance is that the policy expires at the end of the term, allowing you to reassess your needs. You might decide you need less coverage, or no coverage at all. When your policy is ending, you can:

• Convert your term policy into a permanent policy

• Keep your current policy at a higher premium

• Buy a new policy

• Let the policy expire

Which option you choose depends on your financial obligations. If you’re still saving for retirement, paying off a mortgage, or raising children, it may make sense to keep your current policy at a higher cost or shop for a new one. Once you accomplish your financial goals and/or no longer have dependents, you probably don’t need a policy anymore.  

If you outlive your policy’s term and let the policy expire, you won’t receive a refund of the premiums you’ve paid into it.

How to buy term life insurance

After working with an agent to find the right life insurance company, type of policy, coverage amount, and term length, you'll go through the underwriting process, so an insurer can evaluate your background and determine your health classification, which sets your life insurance premiums. You won’t officially have coverage until you sign your policy documents and pay your first premium.

If you need immediate coverage quickly, you can purchase short term life insurance policies such as temporary life insurance during the application process before your actual policy goes in force.

→ Check out our full guide on buying life insurance here

How to find the best term life insurance company

The best term life insurance company for you depends on your specific situation and we’re here to help you every step of the way.

Policygenius carefully assesses the top life insurance companies to determine where they stand on all of the above. We have dozens of unbiased reviews and ratings, along with expert advice from licensed agents who don’t work on commission.

→ Learn more about the best term life insurance companies

Other types of life insurance

• Accidental Death and Dismemberment (AD&D) insurance

• Supplemental life insurance

• Voluntary life insurance

• Key person insurance

• Dead peasant insurance