Term life insurance is designed to help ensure your family has the financial protection they need to continue on without you. It’s the most affordable type of life insurance and fit into most budgets.
A term life insurance plan provides protection during a specific period of time, called a term. The term you choose can last anywhere from 10 to 40 years.
If you die during the term, the life insurance company pays a death benefit to the plan’s beneficiaries. These are people or an organization that you choose.
Once your term life insurance plan is purchased, the premium will never increase the entirety of the term. This is just one reason why we advocate for people to purchase a policy as soon as you need it. The younger and healthier you are when you purchase life insurance, the cheaper it is.
|Cost of a $500,000 20-Year Term Life Insurance Policy for a Healthy Non-Smoking Male by Age|
The table above shows real quotes for a healthy male. A 40-year-old man purchasing $500,000 worth of term life insurance to financially protect his family for 20 years would only cost $29.34 per month. Even if he were to develop a serious medical condition, such as heart disease or cancer, his premiums would remain less than $30 per month.
You can buy $50,000 worth of life insurance coverage or even millions. How much coverage to buy will vary based on your budget and family needs.
How much term life insurance do I need?
As you’re working and earning an income for your family, you hope to grow old with them. But, unfortunately, sometimes those we love die too soon.
Life insurance replaces the income you were providing for them.
“How much life insurance do I need?” is a critical question. The answer will vary depending on your personal circumstances.
» Calculate: Life insurance needs calculator
How much money would your family need if you died suddenly?
To figure this out, you first need to consider costs that would be due upon your death. Costs such as medical bills, funeral costs, and estate administration expenses.
Next, ask yourself how much money is needed so your family can maintain their same standard of living? Money to replace day-to-day living expenses—food, clothing, utilities, and home and car repairs.
You want to ensure your family doesn’t need to sell the house and change school districts, or quit after-school activities. Many of the little things that make life enjoyable require an income.
Additional things to consider are providing an education fund for your children’s future and continuing income for your surviving spouse.
See what you’d pay for life insurance
Benefits of Term Life Insurance
Term life insurance is cost-effective and customizable. While you have a range of term lengths to pick from, you can also meet different financial protection goals by laddering different policies.
For example, buying a 10-year $500,000 term policy can offer a large amount of protection while your children are young. Buying a second 30-year $250,000 term policy on top of that provides extra cushion for a longer period of time. This route would be less expensive than purchasing one $750,000 30-year term policy.
Other benefits include riders and the option to convert.
Child Rider – Low Cost
A child rider is an “add on” you can purchase with your life insurance policy that not only covers the life of your children, but it can be converted into a permanent policy later on in life without the child being required to show evidence of insurability.
Most insurance companies enable you to add on a $10,000 child rider for a total annual cost of $50. This one rider covers all children under age 18. Whether you have one child or five, $50 provides $10,000 on each child. It also automatically includes any future children you may have.
The Accelerated Death Benefit Rider – Free
One living benefit rider that is often included on term life policies at no charge is an accelerated death benefit rider. An accelerated death benefit rider allows the policyowner to receive a portion (or all) of the death benefit early when the insured individual is diagnosed with a terminal illness resulting in a decreased life expectancy.
Because the owner can access the death benefit while still living, it’s referred to as a living benefits rider.
This rider can be a blessing to those who need it. You can use this cash anyway you wish. Trying experimental treatments your health insurance may not cover, for example. Or completing your bucket list.
If you use up (accelerate) your entire death benefit amount, your policy will terminate. If you only use up a portion of the death benefit, whatever is remaining will be paid to your beneficiaries upon your death.
Conversion Rider – Free
Term life insurance is the best choice for most families. Ideally, a provider needs life insurance coverage during their working years but can later rely on savings and Social Security benefits to provide for their family after the term coverage expires.
But if your circumstances change and you want permanent coverage, you may have the option to convert your term policy into a permanent one. Most term life insurance policies include a conversion option.
You decide when (as long as it’s before the conversion expiry date) and how much coverage to convert. If you only convert a partial amount, you’ll have two separate policies: one term life insurance policy (with a now lower premium) and one permanent life insurance policy.
For example, if you were paying $20 per month for a $500,000 term insurance policy and then you decide to convert $250,000 to a permanent policy, your term premiums will then drop to $13 per month, the cost of having a $250,000 policy. And you will also be paying the premiums for your new $250,000 permanent life insurance policy.
The best part of a conversion option is that your coverage is guaranteed no matter your health status. People who develop a serious medical condition benefit greatly from the conversion rider. The conversion option allows a person to continue having life insurance coverage even if they become uninsurable.
The Easiest Way to Buy Term Life Insurance
Start the process by getting a free term life insurance quote. You can comparison shop over 25 life insurance companies through Quotacy without even giving away any contact information.
Apply online when you’re ready and your Quotacy agent will keep you updated from start to finish. If you have any lifestyle or medical risk factors, your Quotacy agent will also do a second round of comparison shopping to ensure the company you chose through the online process is the best option.
In the future, if you need to make changes to your policy or purchase a new one, Quotacy can help.
Note: Life insurance quotes used in this article accurate as of June 3, 2021. These are only estimates and your life insurance costs may be higher or lower.
About the writer
Natasha Cornelius, CLU
Senior Editor and Licensed Life Insurance Expert
Natasha Cornelius, CLU, is a writer, editor, and life insurance researcher for Quotacy.com where her goal is to make life insurance more transparent and easier to understand. She has been in the life insurance industry since 2010 and has been writing about life insurance since 2014. Natasha earned her Chartered Life Underwriter designation in 2022. She is also co-host of Quotacy’s YouTube series. Connect with her on LinkedIn.