When looking to buy life insurance, the most commonly purchased is term life insurance.  Term life insurance is a life insurance product that lasts a specific period of time (a term).  If the insured individual dies within that specific period of time, the life insurance carrier pays a death benefit to the insured’s beneficiaries.  Term life insurance is the least expensive way to purchase life insurance coverage.

Paying for Term Life Insurance

The majority of term policies sold are “level” term policies.  With level term life insurance, your policy premiums remain the same for the entire term length.  So, if you’re paying $21 per month for a 30-year term policy, that $21 will never decrease or increase for the entire life of the policy.

Term life insurance is affordable and can be customized to fit in most budgets.  You have options as to how long you want coverage for.  Not everyone needs the same amount of life insurance coverage.  The most common term lengths are 10, 15, 20, 25, and 30 years.  The longer your coverage lasts, the higher your premiums will be.

Average Monthly Premiums for a
Healthy 30-Year-Old Male
with a $500,000 Term Policy
10-Year Term $18
15-Year Term $20
20-Year Term $24
25-Year Term $29
30-Year Term $35

How much term coverage you own (a.k.a. the amount your beneficiaries would receive if you died) also affects your policy premiums.  The more coverage you own, the higher your premiums.

Average Monthly Premiums for a
Healthy 30-Year-Old Male
with a 20-Year Term Policy
$100,000 $10
$250,000 $15
$375,000 $20
$500,000 $24
$750,000 $31
$1,000,000 $38
$1,500,000 $55
$2,000,000 $70

Not everyone needs one-million dollars’ worth of life insurance coverage.  Buy what you can afford.  Here at Quotacy we always say a $100,000 policy is a million times better than nothing.

Not sure how much life insurance you need?  Try out our needs analysis calculator.  Answering three easy questions gives you a good estimate.

Benefits of Term Life Insurance

  1. Term life insurance is inexpensive. The majority of Americans overestimate how much life insurance costs by three times.  I challenge you to go to our term quoting tool and see how little a policy could cost you.  You might be surprised.
  2. The death benefit is generally tax-free. IRA benefits are taxed.  Social Security benefits are often taxed.  Your 401(k) benefits are taxed.  Most pensions are taxed.  But life insurance benefits?  No tax – 99% of the time.  There are a few situations in which life insurance payouts are taxed.  Read about them here: How Life Insurance is Taxed.
  3. Life insurance is exempt from probate. If you die, many assets first go through probate (a court-supervised process) before being passed down to heirs.  Probate can be costly and time-consuming.  Life insurance death benefits do not go through probate (unless you name your estate or a minor child as your beneficiary – don’t do this) so your beneficiaries will receive the funds much quicker.
  4. Term can be converted to permanent for free. Most term policies automatically include a “term conversion rider” at no charge.  Down the road, if you decide that you want life-long coverage, you can convert your term policy into a permanent policy without needing to go through underwriting again.  Why is this beneficial you ask?  Well, let’s say you purchased a 20-year term policy and were then diagnosed with Stage 4 breast cancer.  Normally, an invasive cancer diagnosis is a decline, but not with a conversion rider.  The life insurance company cannot decline you or take your diagnosis into consideration when determining your permanent policy’s premiums.  Read more about term conversion riders here: What Is a Term Conversion Rider?
  5. You can receive early benefits if diagnosed with a terminal illness. Most term policies also automatically include an accelerated death benefit rider at no charge.  As an example, let’s say you have a $500,000 term life insurance policy and are diagnosed with heart failure and given nine months to live.  Your specific life insurance carrier allows you to cash out up to 75% of the benefit.  You decide to take out half of the benefit ($250,000) to check everything off your bucket list.  When you pass away, your beneficiaries will still receive the remaining $250,000.  Read more about accelerated death benefit riders here: Accelerated Death Benefit Rider: What It Is and Why It’s Free on Most Policies.
  6. Your loved ones are financially protected. Term life insurance is best known as “income replacement.”  If you have a family who relies on you and you die prematurely without life insurance, what happens to them?  They struggle emotionally and financially.  If you die with life insurance, your loved ones will still grieve, but they can pay the bills.  They can stay in their home.  They can go to college.

Get life insurance.  Don’t chance that your loved ones will need to turn to family, friends, or even strangers, like with a GoFundMe account, to pay for your funeral or for their groceries.  If you have people who rely on you financially, with how affordable term insurance is and how easy it can be to buy, there is no excuse not have it.  Start the process by getting a free, anonymous term quote today.


Photo credit to: Christin Hume


Related Posts:

Understanding Life Insurance

Types of Life Insurance Riders

What You Need to Know About Your Term Life Insurance Policy

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