Basics of Term Life Insurance
Term life insurance is an incredibly affordable way to protect your family’s finances from the possibility of your premature death.
Term Life Insurance is designed to provide coverage for a set duration of time, typically 10, 15, 20, 25, 30 or 35 years. Over the course of that term you pay premiums that remain unchanged. Once a term policy expires, the insurance company will generally continue to renew, but the premiums shoot through the roof. Many people end up dropping the coverage at that point.
If you die while your policy is in force, your family (or other beneficiaries you choose) receive the death benefit, also known as the “face amount” of the policy.
Features of Term Life Insurance
Watch the video below to learn what to look for when you’re thinking about buying term life insurance.
- Affordable — term costs less than permanent insurance, at least during the initial level term period
- It turns pennies into dollars at the exact moment those dollars are needed most (this is a benefit of ALL life insurance, not just term!)
- Easy to understand and provides great value for your money, assuming that your need for coverage is temporary (up to 30 years)
- Serves as income replacement if you (as the breadwinner) die, giving your family tax free dollars to use for college tuition, weddings, mortgage payments, bills and other expenses
- Allows a policyholder to buy riders (add-ons) that attach to your term policy (if basic term life insurance doesn’t cover all your needs)
In most cases, you can convert your term policy into a permanent one without a medical exam. Make sure to find out how long that option is available to you. If there’s any possibility you’ll want to extend your coverage beyond the term, conversion could be extremely valuable for you – especially if your health ever declines.
Types of Term Life Insurance
It’s not really “one size fits” all when it comes to term life insurance. You have some options. What type is best for you? Use our calculator and then have one of our experienced and licensed advisors walk you through the process.
Guaranteed Level Term Life insurance
This is your garden variety term life insurance. It’s easy to understand and a smart choice for many. You pay a level premium for a set amount of time (called the term period), typically 10, 15, 20 or 30 years. The policy doesn’t end at the end of that term, but the premiums increase dramatically. As a result, it may become difficult or impossible to maintain the coverage.
As long as the policy is in force when you die, your beneficiaries receive the death benefit, federal income tax free.
Return of Premium Term Life Insurance
A return of premium (ROP) life insurance policy returns 100% of your paid premiums to you (income tax free!) if you’re alive at the end of the term.
Yes, you read that correctly … a 100% refund of your premiums!
For example, a $1,000,000 policy with a 30-year term bought for $2,000 a year would generate a $60,000 refund to the policy owner at the end of the 30th year. Not a bad way to head into retirement!
Annually Renewable Term Life Insurance
With this type of term insurance, premiums start low and rise each year as you get older. The jump in annual cost is bigger every year. For example, the difference in premium from age 50 to 51 is greater than the difference from 30 to 31.
Nowadays, annually renewable term (ART) life insurance is rarely sold, but may work in rare instances for those with very short-term insurance needs.
Decreasing Term Life Insurance
If your need for life insurance is going to drop as you age and as certain liabilities in your life no longer exist, decreasing term life insurance might be for you. The death benefit will decrease at a predetermined rate over the life of the policy, but premiums usually remain level throughout the term (which can range anywhere from one to 30 years). This means the cost per thousand dollars of coverage goes up every year.
Sometimes it is also marketed as “mortgage life insurance.”
Because the coverage is generally not competitively priced, we don’t sell it at AccuQuote.
No Medical Exam Insurance
No Medical Exam Insurance doesn’t require a medical exam, like traditional life insurance, and comes in two variants.
Whole Life No Medical Exam Insurance, you just have to answer a few health questions. This type of coverage is generally limited to under $25,000 of coverage and is more expensive than a traditional Whole Life Insurance policy, but the entire process is fast and hassle-free – approval is usually received in less than a week (from the time the application is submitted).
Term No Medical Exam Insurance. The underwriting process is more like a traditional life insurance but, without the exam. A phone interview is usually required and medical records will still need to be reviewed. This type of coverage is generally limited to policies of under $500,000 and is a slightly more expensive than traditional Term Life Insurance. The entire process is a little faster than a typical but still takes 2-4 weeks.
Is there anything more important than protecting your family?
We’ve helped customers get more than $100 billion (yes, you’re reading that right—that’s BILLION with a “B”) of coverage, and a lot of that has been term, so we certainly recommend this type of life insurance in many situations. But we would be irresponsible to recommend one kind of insurance over another without getting to know you (your goals, health, age, lifestyle habits, etc.).
As far as what kind of insurance is best for you, here’s the answer: the best kind of life insurance is the kind that’s in force on the day that you die.
Since you’re on our site, you’re clearly at least thinking about life insurance. And that means you care deeply what happens to your family when you’re gone.
No other product does what life insurance does. No other product can guarantee large amounts of money when that money is needed most.
Hundreds of thousands of satisfied policyholders across all 50 states can’t be wrong.
Term Life Insurance Quote
Get the Best Quotes for Term Life Insurance
Call Accuquote today at 800-442-9899 and we’ll help you figure out what kind of policy makes the most sense for your needs. You can also click the button below to get a free Term Life Insurance quote. It’s quick and easy.