How do I choose term life insurance?
Choose term life insurance by matching the death benefit and term length to your financial responsibilities. Add up the income, debts, and future expenses your family would need help covering, then choose a policy that lasts through those years. After that, compare the same coverage across several insurers to find a competitive rate.
Consider the following factors to ensure you get the right coverage for your needs.
- Evaluate your financial needs: Tally up your outstanding debts, mortgage payments, and future financial obligations such as college tuition, retirement savings and how much money you plan to provide to your family. Your death benefit should at least meet this amount.
- Choose the right policy length: Select a term length that lasts as long as all of your financial obligations. For example, if you have young children, you may want a policy that provides coverage until they're financially independent. Conversely, if you're nearing retirement and have fewer financial obligations, a shorter-term policy may be enough.
- Shop around: Compare quotes from multiple insurance companies to find the most competitive rate for your age, health status, and coverage needs.
- Reassess your coverage regularly: Life insurance needs change over time as you experience major life events such as marriage and growing a family. Regularly review your term life insurance coverage to ensure it still meets your needs and make adjustments as necessary so that your loved ones are adequately protected.
What is term life insurance?
Term life insurance provides coverage for a set number of years and pays a death benefit to your beneficiaries if you die while the policy is active. Terms are usually between 10 and 30 years, but some companies may offer shorter- or longer-term options.
Because of the limits of the term, life insurance companies charge lower rates for term life than they do for a permanent policy like whole life insurance or universal life insurance. The risk of dying during the set term is lower than with a permanent policy. The shorter the term, the lower the risk.
What are the types of term life insurance?
Term life insurance comes in several forms, with the main differences involving how long coverage lasts and whether the premium or death benefit changes. Level term is the most common choice because it keeps coverage predictable. Other options, such as annual renewable, decreasing term, and return-of-premium insurance, serve more specific needs.
There are several variations of term life insurance, all with slightly different underwriting or coverage features.
- Guaranteed level term life insurance (The premium and death benefit do not change)
- Return of premium term life insurance (If you don’t die during the term, premiums are returned to you)
- Annual renewable term life insurance (Renews every year; rates will increase)
- Decreasing term life insurance (Death benefit reduce over time)
- Modified term life insurance (Premiums change over time, but death benefit doesn’t)
EXPERT TIP: Guaranteed level term life insurance is a good choice for most people; it's simple, affordable and allows you to get more coverage for your insurance dollar. If you're healthy, don't skip the medical exam. You'll likely get lower rates with a fully underwritten policy.
How much does term life insurance cost?
The average term life insurance cost is $511 a year for a 30-year-old male non-smoker, $421 per year for a 30-year-old female non-smoker with a death benefit of $500,000 and a 20-year policy term, according to 2026 Insurance.com rates from the Compulife quoting system.
It’s generally more affordable than people think.
"Consistently, consumers have told our researchers they believe they can't afford life insurance, but when we dug deeper, our research showed that many overestimate the cost by as much as 300%," says Robert Kerzner, LIMRA's president and chief executive officer.
Many factors go into the cost of term life insurance, including age, gender, and health status. Here are the average annual premiums for term life death benefits of $500,000 for people classified as "regular" health.
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Average annual premiums for term life insurance, $500,000 death benefit
| Health profile and term length | Age 30 | Age 40 | Age 50 | Age 60 |
|---|---|---|---|---|
| Female non-smoker 10-year term | $343 | $501 | $986 | $2,055 |
| Female non-smoker 20-year term | $421 | $650 | $1,396 | $3,565 |
| Female smoker 10-year term | $774 | $1,285 | $2,717 | $6,172 |
| Female smoker 20-year term | $994 | $1,842 | $4,067 | $9,324 |
| Male non-smoker 10-year term | $426 | $603 | $1,280 | $2,986 |
| Male non-smoker 20-year term | $511 | $819 | $1,850 | $5,131 |
| Male smoker 10-year term | $1,011 | $1,630 | $3,743 | $8,705 |
| Male smoker 20-year term | $1,287 | $2,408 | $5,493 | $13,064 |
*Limited quotes available. Data source: Compulife Quotation System, 2026.
What is the difference between term, whole and universal life insurance?
Term life insurance covers you for a specific period, such as 10, 20 or 30 years. Whole life and universal life are designed to last your entire life as long as you meet the policy’s premium requirements.
Permanent policies also build cash value, while term life insurance does not. Because term life offers temporary protection without cash value, it is simpler and less expensive than permanent life insurance.
If you’re trying to decide between term and whole life insurance (or universal life), look at the quick comparison chart below.
| Category | Term | Whole | Universal |
|---|---|---|---|
| Premiums | Level | Level | Flexible |
| Death benefit | Level/guaranteed | Level/Guaranteed | Flexible |
| Length of coverage | Expires at end of term | Entire life | Entire life |
| Cash value | No | Yes | Yes |
| Medical exam | Sometimes | Sometimes | Yes |
| Cost | Lower | Higher | Higher |
It’s important to note that permanent life insurance, especially universal life, should be discussed with an insurance expert and a financial advisor before you make a purchase to be sure it’s right for you.
What are the benefits of term life insurance?
Term life insurance works well when you need a large death benefit at an affordable price for a specific number of years. It is straightforward, doesn't require you to manage cash value and lets you match coverage to financial responsibilities such as a mortgage or raising children. Some policies also offer renewal or conversion options.
The benefits of a term life insurance policy include:
- Less expensive. Term life insurance offers extensive coverage at an affordable rate.
- Easy to understand. While policies like universal life can be complex, term life is straightforward.
- Flexibility. You choose the term length and death benefit.
- Death benefits are tax-free. Your beneficiaries won’t be taxed on the death benefit.
- No penalties or cancellation fees. You can cancel your term policy without incurring any fees or penalties.
- Convertible. You can convert to permanent coverage at the end of the term in most cases.
Of course, there are also cons of term life insurance:
- For most people, the biggest downside is that the coverage expires, and there is no return on the investment.
- Term life doesn't have a cash value component, either, unlike whole life insurance.
What happens if I outlive my term life policy?
If you outlive your term policy, the coverage will end, and you will not receive anything back from the insurance company. Depending on your contract, you might be able to renew the policy, convert it to permanent insurance, or let the coverage end.
EXPERT TIP: There is one exception that allows you to get money back on a term life policy. Return-of-premium term life insurance pays you back your premiums at the end of the term. It's more expensive, and acts as regular term life insurance otherwise.
The purpose of term life is to provide coverage when it’s most needed and then to expire when you no longer need it. However, if you reach the end of your term and discover that the need is still there, you can convert the policy to a permanent life insurance plan, like whole life insurance.
You will pay higher rates because you are older, but you won’t have to take a new medical exam in most cases.
Should I buy no-medical-exam term life insurance?
You should only buy no-medical-exam life insurance if there are factors that would make it difficult or more expensive for you to get a traditional policy, such as health issues. If you have health problems, you might want to consider a "no medical exam" term life insurance policy, known as simplified issue life insurance.
Term policies use several different underwriting methods.
- Traditional underwriting requires medical information and a medical exam.
- Accelerated underwriting allows qualifying applicants to skip the medical exam while the insurer reviews electronic health and other permitted data.
- Simplified issue also skips the medical exam, but uses a shorter underwriting process and often charges more than comparable fully underwritten coverage.
A medical exam is usually required when applying for a standard term life insurance policy. The exam will check your height, weight, medical history, and smoking habits and include a blood and urine test. These tests will look for specific medical problems.
The results may hinder you from getting approved for insurance, or you may wind up with much higher rates depending on the outcome.
These policies require only a few health questions and no medical exam. You will pay a higher premium for a no-exam life insurance policy, so if you are in good health, a traditional policy is your best bet.
Who should buy term life insurance?
Term life insurance is a good fit if anyone depends on you financially and you need coverage for a specific period. It can protect your family while you're raising children, paying a mortgage or earning the income they depend on. It can also protect a household when an unpaid caregiver provides valuable child care or other services. .
Cameron Ellis, an assistant professor in the Department of Risk, Insurance, & Healthcare Management at the Fox School of Business at Temple University, says that getting life insurance as soon as someone else depends on your income is a good idea.
"This could be when you and someone else sign a lease together or purchase a car/home. Or it could be whenever you have children. If one spouse is 'stay at home,' I would still recommend they purchase some life insurance. Even though there is no lost income, replacing the lost childcare and domestic duties can be very expensive," Ellis says.
Term life insurance is the simplest type of life insurance to get and it's become even easier to get approved these days.
"Insurance companies are offering term life insurance products today that speed up the underwriting process and may not include a medical exam for policies within a certain benefit amount and for a person under a specific age, say 50 years old," Carrie Skogsberg of COUNTRY Financial Life Insurance says.
Term life is a good choice for most people, and is more affordable than permanent life insurance.
How much term life insurance do you need?
You need enough term life insurance to cover the financial gap your death would leave behind. Add income replacement, debts, child care, education, and final expenses, then subtract savings and existing life insurance your family could use.
When deciding how much life insurance you need, think about:
- Funeral costs
- How much will it cost to replace your income
- The services that would need to be paid for, such as childcare
- Your outstanding debts, such as mortgages, credit card bills, and loans
- Long-term financial commitments, such as paying for college
You can use Insurance.com’s life insurance calculator to determine how much coverage you should have. The life insurance calculator considers your funeral costs, mortgage, income, debt, and future education to give you a clear estimate of the ideal amount of life insurance coverage.
What are term life insurance riders?
Term life insurance riders are additional coverage or benefits that can be added to the policy for an extra cost. A rider can help customize coverage to your specific needs, but it may reduce the death benefit or limit when you can use it.
Here are some common term life riders:
- Accidental death. Pays out additional benefits if your death is accidental.
- Family income benefit. Replaces lost income.
- Guaranteed insurability. Lets you add coverage to your policy without going through a medical exam later.
- Long-term care. The rider helps if you need long-term care in a nursing home or home care.
- Waiver of premium. Waives your premium if you become disabled or lose your income due to injury or illness.
How to buy term life insurance
Buying term life insurance starts with deciding how much coverage you need and how long you need it. Compare insurers using the same death benefit and term length, then complete underwriting and review the final offer before paying the premium.
Follow these steps:
- Find the top life insurance carriers. You can start your search by checking out Insurance.com’s ranking of the best life insurance companies.
- Check financial stability. You can review financial stability ratings from agencies such as Moody's, S&P Global, A.M. Best, and Fitch to get an idea of the company’s strength.
- Read customer reviews. See what others have to say about their experience with the insurer.
- Compare rates. Once you have narrowed your choices, get quotes from your top picks and compare rates.
How can you save on term life insurance?
You can lower term life insurance costs by buying while you're younger, comparing several insurers, and choosing only the coverage and term you need. Health and tobacco use also have a large effect on pricing. Focus on changes that improve your underwriting profile without cutting the death benefit your family actually needs.
Here are five ways to save on life insurance:
- Shop around. The best way to ensure you have the best rate is to compare rates from multiple companies.
- Don’t over-insure. You might not need as much coverage as you think. Make sure to use a calculator so you don’t overpay.
- Check with your employer. You might be eligible for a group policy through work, which is usually cheaper.
- Quit smoking. You’ll qualify for cheaper rates.
- Improve your health. Losing weight and correcting issues like high cholesterol and high blood pressure can earn you a cheaper rate.
- Don’t wait to buy. Unless you are trying to improve your health, it doesn’t pay to wait. The younger you buy life insurance, the more you will save.
FAQ: Term life insurance
Is term life insurance worth it?
Term life insurance is worth it if someone would face financial hardship if you died during the policy term. It gives you a larger death benefit at an affordable cost than permanent coverage.
How much does term life insurance cost per month?
The monthly cost of term life insurance depends on various factors, including your age, health status, the term's length, and the death benefit amount. Get quotes for your particular situation to find out what your rates will be. 37
What does term life insurance cover?
Term life insurance pays a death benefit if you die while the policy is in force and the claim is covered under the contract. Your beneficiaries can use the money for any purpose, such as replacing income, paying a mortgage, covering funeral expenses or funding education.
What happens to the overall annual premium cost once a term rider expires?
After the term rider expires, the premium will return to the cost without the rider.
What happens at the end of a 20-year term life insurance policy?
When the 20-year term is up, the policy will expire unless you choose to convert it to a permanent life insurance policy.
