If you're shopping for life insurance, a term life policy may be the right fit: Usually, it's the most affordable option and it provides coverage for a set number of years. So, for example, you'll be assure your family is protected while you're still paying off the mortgage or the kids are still young.
Term life is also the easiest to apply for: Several providers provide sample quotes online and can give approval within minutes.
Read: The best term life insurance companies
In many cases, term life can be converted into permanent life insurance, which can stay in force for the rest of your life.
But it's not without its drawbacks—most notably if you outlive the policy, you walk away with nothing.
What is term life insurance?
A term life insurance policy only covers you for a set period, generally between 10 and 30 years. If you die for a covered reason within that period, your beneficiaries will receive the predetermined death benefit, which can be anywhere from $50,000 to millions of dollars.
If you live past the term, however, the policy lapses and there's no payout.
Some insurers will offer a return of premium rider that, for an additional cost, will reimburse the policyholder some or all of their premiums if they outlive the policy term.
Types of term life insurance
While term life is much simpler than other kinds of life insurance, there are several types:
Level term life insurance: The most common form, it keeps the death benefit constant throughout the life of the policy.
Decreasing term life insurance: Less common, this policy has a death benefit that shrinks over time as your loved ones need less financial protection. It's generally cheaper than level term.
Renewable term policy: This plan allows you to renew at the end of your term, up to a certain age. Your rates will likely rise with each renewal.
Return of premium policy: For an additional cost, you can receive some or all of your premiums back if you outlive your term.
How much does term life insurance cost?
Unlike universal life and other types of permanent life insurance, term life doesn't build cash value, or funds that can be withdrawn while you are alive to pay premiums or borrow against.
So, term life insurance ends up costing less: According to Policygenius, a 30-year-old woman would pay an average of $23 a month for a 20-year term and $500,000 of coverage, while a 30-year-old man would pay about $30 a month for the same policy.
A 30-year-old woman in good health could pay $408 per month (or nearly $4,900 a year) for a whole life policy with that payout. A male would spend an average of $472 per month, or close to $5,700 a year
Your individual rates will vary, however, depending on your age, gender, medical history, the plan you choose and any riders you add.
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Amica offers a level term life insurance and whole life insurance policies payable for 20 years or until ages 65 or 100. Both include a terminal illness rider at no extra charge.
Terms Apply
Pacific Life offers term, permanent and no-exam life insurance, with an accelerated death benefit included at no charge.
Terms Apply
Is term life insurance worth it?
Term life insurance can be a useful tool if you're looking for affordable coverage to protect your family when your financial support is most needed —when the children are still at home or while you're still paying off the mortgage.
Term life might not sense if you're older and your big expenses (mortgage, kids' tuitions, car) are paid off. Or if you're trying to use life insurance as a vehicle to build wealth, like you can with permanent life policies.
Pros and cons of term life insurance
- Most affordable form of life insurance
- Can protect your family during the growing years
- Quick approval, often without a medical exam
- Policy may be able to convert to permanent life insurance
- Expires after predetermine term limit
- Doesn't have a cash value component
- The cost at renewal can be much higher
- if your health status changes, an insurer can refuse to renew
Term life insurance FAQs
How much term life insurance do I need?
There are a few ways to determine how much term life insurance you need. One common rule of thumb is to multiply your salary by 10. So, someone earning $75,000 per year would need about $750,000 worth of term life insurance.
What is the difference between term and whole life insurance?
The biggest difference between term life and whole life insurance is that term life is only in force for a preset period, typically 10 to 30 years. Whole life will stay in force as long as you keep paying your premiums. That makes it more expensive, but it also allows whole life policies to earn a cash value component you can access while you're alive and, sometimes, earn dividends.
What happens if I outlive my term life insurance?
If you outlive your term life insurance policy, no benefits are paid out unless you have a return of premium rider. Some providers also allow you to renew your policy with the same payout, although your premiums will likely go up because of age-related risks.
What is the cheapest type of life insurance?
Because it's only active for a set period and doesn't earn cash value, term life is generally the cheapest type of life insurance. A whole life insurance plan, for example, can cost more than ten times as much as a term life policy for the same amount of coverage.
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