Term Life Insurance

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What Is Term Life Insurance?

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Term life insurance is the simplest and most affordable type of life insurance you can get. It lasts for a set period of time (the term), such as 10, 20, or 30 or more years and is often referred to as 5/10/15/20/30/40-year term life insurance. If you as the insured dies during the term, your beneficiary(ies) — usually your spouse and/or children — receive a tax-free benefit payment.

The main reason term life insurance is so attractive is its affordability and relative ease of acquiring coverage. Term life insurance is often chosen for its simplicity and affordability compared to permanent life insurance policies, like whole life or universal life, which provide lifetime coverage and often include a cash value component.

As part of a strong overall financial plan for you and your family, a term life insurance policy will protect against loss of income in case of your death, so your loved ones will be financially secure. Planned well, it can cover essential expenses, including burial costs, living expenses, mortgage payments, and college tuition for the future.

You want to know that your family will be happy, comfortable, and cared for, regardless of unexpected life events.

Who Needs Term Life Insurance Quotes?

People seek term life insurance quotes for various reasons, and it can be beneficial in many situations. Here’s a breakdown of who might need term life insurance quotes:

Parents with Young Children – If you have dependents who rely on your income for their livelihood, term life insurance can provide financial security for them in the event of your premature death. It can cover living expenses, education costs, and any outstanding debts.
Homeowners with Mortgages – If you have a mortgage, a term life insurance policy can ensure that your family can pay off the home loan and continue living in the house should something happen to you.
Couples – If you’re in a relationship where one partner significantly contributes more to the household income, term life insurance can help maintain the lifestyle for the surviving partner.
Business Owners – Business owners might need term life insurance to cover business debts, protect against the loss of a key employee, or fund a buy-sell agreement in the event of a partner’s death.
Individuals with Debt – If you have significant debts, such as personal loans or credit card debt, term life insurance can help ensure that these debts are covered and not passed on to your family.
Those Looking for Affordable Coverage – Since term life insurance offers coverage for a specified period, it’s generally more affordable than permanent life insurance, making it a good choice for those seeking a budget-friendly option.
Individuals with Temporary Needs – If you anticipate a need for coverage only for a certain period — for example, until your children are financially independent, or a debt is paid off — term life insurance can be an ideal solution.
High-income Individuals Planning for Estate Taxes – For those with significant assets, term life insurance can provide a way to cover future estate taxes, ensuring that heirs are not burdened with heavy tax liabilities.

Getting term life insurance quotes allows individuals to compare term life insurance costs and coverage options from various insurers to find a policy that meets their needs and budget. It’s important to consider how much coverage you need, the term length, and whether there are any additional features or riders that could be beneficial for your situation.

Keep in mind — term life insurance offers pure death protection only. When you buy term life insurance online or from an agent, it offers no living benefits, such as guaranteed cash values that you might find with whole life insurance.

How to Choose the Term Life Insurance Policy for You

When selecting a term life insurance policy and the amount of coverage, the first factor to consider is the family’s financial obligations during the policy term. These may include:

Credit card balances
Mortgage balances
Car loans, student loans, and other debts
Living expenses
College tuition – Estimate the cost of education at the time your children will enroll. Keep in mind that currently education costs are rising by about 5% annually.
Funeral expenses – Usually $10,000 to $20,000

Next, consider your annual income, how many years you expect to continue earning income, and current assets. Once you’ve planned for the major expenses above, multiply half your annual pre-tax income by the number of years until retirement.

Many families will need somewhere in the range of $500,000 to $1 million in coverage. A policy with this level of coverage will cost somewhere in the ballpark of $350–$650 a year. The rate may vary depending on different factors, like type and length of your policy.

Term Life Insurance Quotes

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Types of Term Life Insurance

While level term life insurance is the most common, there are other types of term life insurance available. However, unlike permanent or whole life insurance, any type of term life insurance will only pay a death benefit if the insured person dies during the term of the policy.

Here are the main types of term life insurance available on the market today:

Level Term Life Insurance: The most common type, where the death benefit and premium remain constant throughout the duration of the policy.
Increasing Term Life Insurance: The death benefit increases over time, typically to keep pace with inflation or increasing financial needs, while premiums may increase as well.
Decreasing Term Life Insurance: The death benefit decreases over the term of the policy, usually tied to the decreasing balance of a mortgage or other debt. Premiums usually remain level.
Convertible Term Life Insurance: This policy allows the policyholder to convert their term policy to a permanent life insurance policy without undergoing a medical exam. Conversion rules, including timing and available permanent products, vary by policy.
Renewable Term Life Insurance: Offers the ability to renew the insurance policy for additional terms without a medical examination, albeit at a higher premium that reflects the insured’s older age.
Return of Premium Term Life Insurance: If the insured outlives the term of the policy, all or part of the premiums paid are returned. This option comes with higher premiums compared to standard term life insurance.

Each type of term life insurance serves different financial planning needs, such as providing for dependents, covering debts, or aligning with specific financial goals. It’s important to evaluate your personal financial situation and future needs when choosing the type of term life insurance that’s right for you.

Term Life Insurance Policy Rates

When looking for the best term life insurance policy, expect to pay an annual premium that covers the risk of death during that year. Whether you acquire coverage directly from an insurance agent or through online term life insurance, level term life insurance premium policies have premiums that remain fixed during the term, while others have premiums that increase over time.

Factors that determine your premium are age, health, marital status, career, and location. In most cases, the insured must get a medical exam, and the results can affect the cost of your premium. Smokers will pay higher premiums, as will those with health conditions.

Guaranteed issue term life insurance policies do not require a medical exam but are generally more expensive. It pays to get quotes through an unaffiliated source, such as einsurance.com, to see where to get the best value for your insurance dollars.

Fast Facts

Cost of raising a child: Source: Northwestern Mutual	$320,000
Number of unintentional injury deaths: Source: CDC	222,698
Deaths per 100,000 population: Source: CDC	66.5

Remember, choosing the right life insurance policy depends on your financial situation, goals, and dependents’ needs. It’s often recommended to consult with an insurance specialist or financial advisor to evaluate your situation and make an informed decision.

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Frequently Asked Questions (FAQs)

Get clear answers to common insurance questions and important details to guide your coverage decisions.

What is term life insurance?

Term life insurance is a policy that provides coverage for a specified period, such as 10, 20, or 30 years. If the insured dies during this term, the beneficiaries receive a death benefit. Unlike permanent life insurance, term policies do not accumulate cash value.

How does term life insurance differ from whole life insurance?

Term life insurance offers coverage for a set period with no cash value component, making it generally more affordable. Whole life insurance provides lifelong coverage and includes a cash value element that can grow over time.

Who should consider purchasing term life insurance?

Individuals with dependents, outstanding debts like mortgages, or those seeking affordable coverage for a specific time frame may find term life insurance suitable. It’s ideal for those wanting to ensure financial protection during key life stages.

What happens if I outlive my term life insurance policy?

If you outlive the term, the coverage ends, and no death benefit is paid. Some policies offer options to renew or convert to permanent insurance, though premiums may increase.

Can I convert my term life insurance to a permanent policy?

Many term policies include a conversion option, allowing you to switch to a permanent policy without a medical exam. This must typically be done within a specified period.

How are premiums determined for term life insurance?

Premiums are based on factors like age, health, term length, and coverage amount. Generally, younger and healthier individuals receive lower rates.

Is a medical exam required to obtain term life insurance?

Many insurers require a medical exam to assess health risks. However, some offer ‘no medical exam’ policies with simplified underwriting, which may have higher premiums.

What is the ‘return of premium’ feature in term life insurance?

This feature refunds the premiums paid if you outlive the policy term. While it provides a return, such policies often have higher premiums compared to standard term life insurance.

Can I have multiple term life insurance policies?

Yes, it’s possible to own multiple policies to address different financial needs. Ensure the combined coverage aligns with your financial goals and that you can manage the total premiums.

What happens if I miss a premium payment on my term life insurance?

Missing a payment may lead to a policy lapse after a grace period, typically 30 days. It’s crucial to understand your policy’s terms regarding missed payments to maintain coverage.