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Term life insurance is the most commonly purchased type of life insurance on the market. That means you have a lot of choices available. Fortunately, with the help of today’s article, you’ll have everything you need to decide if this type of life insurance is right for you.

Before we dive in to the specifics, let’s go over the basics first.

Here’s What Term Life Insurance Really Means

Don’t let the name intimidate you. Term life insurance is simply a type of life insurance that lasts for a specific period of time called 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 increase (or decrease) for the entire life of the policy.

Term life insurance is affordable and can be customized to fit most budgets. You have many options as to how long you want coverage for. Not everyone needs the same amount of life insurance coverage. The term length options include 10, 15, 20, 25, 30, 35, and 40 years. The longer your coverage lasts, the higher your premiums will be.

» Compare: Term life insurance quotes

Average Monthly Premiums for a Healthy 30-Year-Old Male with a $500,000 Term Life Insurance Policy
10-Year Term $16.21
15-Year Term $17.05
20-Year Term $20.70
25-Year Term $26.40
30-Year Term $34.12
35-Year Term $38.94
40-Year Term $52.18

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

Not everyone needs $1,000,000 in 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? We’ve got your back.

Before you research term life insurance rates, check out our free life insurance calculator.

After answering a few easy questions, you’ll have a good estimate of how much term life insurance to buy.

See what you’d pay for life insurance

Comparison shop prices on custom coverage amounts from the nation’s top carriers with Quotacy.

6 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 will be 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, but our agents can help you avoid that situation.

» Learn more: How Is Life Insurance 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.

» Learn more: 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.

» Learn more: 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.

10 Reasons Why You May Buy a Life Insurance Policy

  1. You need a policy to secure a business loan until it is repaid.
  2. You are getting divorced and your settlement requires a policy to secure spousal maintenance or child support until age 18.
  3. You are buying a home and require a policy until your mortgage is paid-in-full.
  4. You have a family (spouse, domestic partner, or children) who rely on your financial support. You need a policy to replace your earned income.
  5. You wish to leave some money to your family or pay for your final expenses.
  6. You are a key person in a business and your death would negatively impact the success of your company. You need a policy as part of your business plan.
  7. You wish to use life insurance to equalize inheritance of a family farm or business.
  8. You wish to donate to a favorite cause or charity via life insurance.
  9. You don’t want to leave your debt behind after you die. Your policy will pay it off.
  10. You want to fund your kid’s education, wedding, or another important milestone even if you cannot be present to witness the big day.

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.

Watch the Term Life Insurance Video

About the writer

Headshot of Natasha Cornelius, a life insurance writer, for Quotacy, Inc.

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.