Last updated: April 24th, 2023
Reviewed by
Lisa A Koosis
Medical Claims Specialist
Table of Contents
Guaranteed level term life insurance provides coverage for a fixed period, with locked-in premiums and death benefit, ensuring financial protection for beneficiaries.
Term life insurance is perhaps the easiest, most straightforward type of life insurance. The cost is affordable, and premiums and coverage often stay the same, depending on the type of term policy you purchase. Level term life insurance, in particular, is often an attractive option.
Term life insurance is simple. You choose how much coverage you want and how long you want the coverage for (known as the term). If the insured passes away during the chosen term, the beneficiaries receive a check for bank deposit in the amount of the death benefit.
During the term, the cost (known as the premium) doesn’t increase. The benefit stays the same unless the policy is set up to reduce the benefit over time.
Furthermore, the insurance company will not cancel the policy, even if your health changes or you develop serious health conditions. The only time the insurer will cancel your policy is if you miss payments or if fraud or misleading information is found in the application.
Multiplying your annual income by 10 to 15 is a simple way to calculate your coverage needs. For example, if you make $50,000 a year, $750,000 of coverage is a good rule of thumb. You should also consider other factors, such as any outstanding debt you want the benefit to pay off if you pass away.
But you shouldn’t have to struggle to make life insurance policy payments. A $50,000 policy you can easily afford is better than a $750,000 policy that may lapse because you missed payments. Be sure to compare rates for multiple coverage amounts, and make sure you can afford the policy you get. If you find you can’t make the payments, you can ask the company to decrease the death benefit to lower your payments. Conversely, you cannot increase the death benefit without re-applying.
The policy term is the amount of time the contract between you and the insurer lasts. Most insurance companies offer 5-, 10-, 15-, 20-, 25-, and 30-year policies. Some even offer 40-year policies.
The maximum term period available to you will depend on your age. Most likely, you won’t be able to get coverage beyond age 90 with a term policy. Keep in mind that you can always cancel your term life insurance policy if you no longer need it.
It may be better to opt for a 20-year term to be on the safe side. This may cost more than a 10-year term policy. However, you could save a lot of money compared to choosing two consecutive 10-year terms. That’s because during the 10-year period you hold the first plan, costs could go up for a variety of reasons, including your health and age.
Medically underwritten term life insurance policies offer the best price for healthy individuals. But as the name indicates, they require a medical exam.
The medical exam is scheduled with a nurse, paramedic phlebotomist or another medical technician. You may visit an office or have the exam in your own home. In-office visits with a physician may be required if treadmill tests or other similar exams are required.
The medical exam probably isn’t as bad as you think. The medical professional takes your vitals, such as blood pressure and pulse. They may also draw blood and collect a urine sample for a more in-depth review.
If you don’t want to undergo the medical examination, you can opt for a no medical exam term life insurance policy instead.
We mentioned it’s better to go with a $50,000 policy that you can afford than a $750,000 you struggle to pay. While some insurers may be more forgiving than others, the insurer will cancel the policy if you miss payments. Most states do offer a grace period of at least 30 days before policies can be canceled. These are state-governed regulations that vary by state.
Probably less than you think. Level term life insurance and other term variants are some of the most affordable types of life insurance available. In fact, according to a recent study, around 50% of people overestimate how much money term life insurance costs.
Other types of life insurance can cost 5 to 210 times more than term life insurance. So, if you’re looking for the most affordable life insurance, term life insurance is for you.
We’ll talk about why term life insurance is so affordable next, but first, here are some sample prices.
These rates are calculated for a 20-year term policy.
| Age & Gender | $50,000 | $250,000 | $500,000 | $1,000,000 |
|---|---|---|---|---|
| 25 – Male | $8.61 | $12.35 | $19.11 | $31.16 |
| 25 – Female | $7.83 | $10.89 | $15.72 | $23.47 |
| 35 – Male | $9.48 | $13.38 | $21.28 | $35.06 |
| 35 – Female | $8.66 | $12.12 | $17.87 | $29.91 |
| 45 – Male | $15.27 | $26.31 | $46.27 | $88.85 |
| 45 – Female | $12.83 | $21.22 | $37.20 | $69.10 |
| 55 – Male | $31.97 | $64.81 | $119.13 | $227.85 |
| 55 – Female | $24.71 | $48.87 | $88.73 | $166.17 |
| 65 – Male | $81.61 | $201.35 | $387.35 | $748.10 |
| 65 – Female | $63.12 | $142.47 | $264.22 | $508.99 |
The prices above are sample prices calculated for non-smokers based in Arizona in excellent health. Get a quote to calculate your price.
Term life insurance is one of the most affordable types of life insurance. In fact, term life can cost 5 to 20 times less than whole life insurance.
There are a few reasons term life insurance is so affordable:
It’s no surprise it costs more money to buy a new life insurance policy as you get older. That’s true for any kind of life insurance.
Additionally, as you age, your chances of developing one or more health conditions go up. That could also increase the rate you would pay for coverage. In short, the longer you wait, the fewer choices you’ll have for purchasing affordable life insurance.
However, if you buy a term life insurance policy while you’re young and healthy, you can lock in a lower price. This will minimize your cost for coverage as the years go by.
If you have one or more significant health conditions, such as diabetes or even cancer, not all companies will rate you the same way. Working with an independent agent can help make the shopping and application process easier and your coverage more affordable.
It depends on the type of term life insurance. A guaranteed level term life insurance is our recommended, and the most popular, type of term life insurance. With this type of term insurance, the premium and death benefit are guaranteed to stay the same.
Here are a few scenarios when term life insurance is a great option:
If you are single or have no children, you probably don’t need life insurance. But if you recently married or started a family, consider buying a term life policy.
A term life policy is usually the most affordable type of life insurance for young couples who are starting out. Such a policy will help protect your family and make sure they are taken care of in case you die suddenly. For instance, it may help fund your children’s education in your absence.
In that scenario, a term life policy would also help pay for outstanding liabilities. Your spouse and other family members wouldn’t need to worry about obligations like personal loans, credit card debt, mortgages, and car payments.
We believe so. There are at least two good reasons you might want to convert your term life policy:
Here’s an example:
Let’s say a 45-year-old man has a 20-year term policy that includes a 10-year conversion clause. Nine years into the life of the contract, he develops a health issue, such as heart disease or diabetes. Because he’s within his 10-year conversion period, he can convert his temporary policy to a permanent one without another physical exam.
If his term life insurance policy was written without the conversion clause, he would be facing an expiring policy and costly renewal premiums. That’s assuming he was able to get insured at all, given his change in health status.
Even if you don’t develop a health issue, you will get older. That means you’ll find it considerably more expensive to purchase a new policy when your term policy expires.
You can see why it makes sense to at least consider including a conversion option in a term life insurance policy.
In most cases, a conversion option lets you convert all or part of your term policy to a permanent policy without additional underwriting. That means you probably won’t have to take a physical exam when you convert your policy. The conversion needs to be done within a specified time frame or before you reach a certain age. Either way, you must take advantage of the option to convert the policy before the term ends. You can’t convert it afterward.
When buying a term life insurance policy, always ask if there’s a conversion option. Think of it as leasing your insurance policy with the option to buy it at some point.
Keep in mind that conversion options vary from one insurer to the next. Some companies have excellent conversion options, whereas others have terrible options or none at all. You’ll most likely pay a little more to include this type of option in your policy, but it could well be worth it. As we illustrated in the example above, buying a policy without a conversion clause can turn out to be a costly mistake.
We represent dozens of companies. Therefore, a licensed agent can help you decide if a term life insurance policy with a conversion option is your best choice. They can also help determine if another type of coverage — such as permanent variable, whole, or universal life insurance — might be a better decision. Whatever choice you make, we can help you find the right policy at the right price.
Every insurance company uses its own equation to determine the maximum amount of coverage it will offer an applicant. Typically, the equation includes some combination of annual gross household income and net worth.
For most people with a net worth in the “normal” range, the main factor is a multiple of income based on their age
| Your Age | Recommended Multiple | Maximum Multiple |
|---|---|---|
| 20 – 30 years old | 15x income | 20x income |
| 31 – 40 years old | 15x income | 20x income |
| 41 – 50 years old | 10x income | 15x income |
| 51 – 60 years old | 7x income | 10x income |
| 61 – 65 years old | 5x income | 7x income |
| 66 and older | 3x income | 5x income |
Premiums stay the same over the term of the policy. The policy can be renewed at the end of the term, but the premiums will likely be higher at that time.
The coverage is renewable after a year. The coverage will stay in force, even if the insured person would be rejected when applying for a brand-new policy. Like most other term policies, the premiums are based on the insured’s age at the time of renewal.
If the insured person outlives the term of the policy, the insurance company will pay back, or return, the premiums to the policyholder. The catch is that premiums for return of premium term life insurance policies are about three times higher than for other term policies.
A living benefits life insurance rider is an add-on to a term policy. It lets a still-living insured person use the policy’s benefits to help cover the cost of specific types of expenses, such as medical bills. When you can use the rider depends on the type of living benefit.
The benefits steadily decrease over the course of the term. The decreases generally occur at specified annual or monthly intervals.
Premiums and coverage remain the same for the duration of the policy.
These policies only guarantee stable premiums and coverage for part of the term. After that, premiums and coverage could fluctuate. Keep an eye out for a provision like this in your policy.
Usually, these policies are provided by employers. Rather than an individual being the policyholder, it is the employer or organization paying the premiums. There are other ways to get a group life insurance policy outside of getting it through an employer.
The best choice depends on your personal scenario and circumstances. However, we typically recommend a guaranteed level term life insurance policy with a term of 20 years. As long as you pay the premiums on time, the premiums and death benefit will stay the same for the entire 20 years. That means guaranteed level term life insurance policies are dependable and consistent.
Insurist makes it easy to compare term life insurance rates entirely online.
Depending on the product and carrier you choose, you may be able to complete every step online.
Either way, our licensed agents are here for you, every step of the way. They can answer your questions and even walk you through the process.
We can do that. Just call 1-866-816-2100 and our licensed agents are happy to assist you. They can provide you with multiple rates or find you coverage based on your budget.
If you like the rate we find, we’ll make it easy for you to apply.
Busy schedule? Don’t feel like calling? We’ll do the work for you. Simply submit a request for us to shop for you, give us some details, and we’ll email you the term rates we find.
Be sure to tell us about your health conditions as well. Perhaps term life insurance isn’t the right for you. In that case, we can present you with alternative options.
Typically, the policy will come to an end. Depending on the insurer though, you may be offered an extension before the term ends at an increased premium. Or you could be offered an alternative product depending on your age.
It’s for this reason we recommend getting policies with a conversion clause. These policies let you convert your term policy to a permanent policy when the term ends.
No matter the insurance product, the “payout” process to the beneficiaries is the same. Generally, beneficiaries must file a claim with the insurance company and present a death certificate to receive a payout on the policy. Death benefits are typically paid as a one-time lump sum.
The rule of thumb for term life insurance is to spend 1% of your gross income on coverage plus 1% for each dependent. However, everyone’s scenario is different. Keep in mind that the policy will come to an end if you miss payments. It is most important to be able to make the payments comfortably.
We disagree with the analogy of “renting versus owning” when it comes to life insurance. With a house, for example, the cost of renting vs buying is often similar. In that sense, buying can make more sense than renting.
But with life insurance, the cost of “renting” (term) compared to buying (permanent) is often 10 times less!
Before you choose an insurance company, search online for company reviews and complaints. See if the company has a good reputation from customers who have already purchased from them. The Better Business Bureau and Google Business are good places to start. There are sites online that are dedicated to conducting life insurance company reviews that share the positives and negatives of each company.
Brian is the founder and CEO of Insurist and carries Life, Health, and Property & Casualty licenses in all 50 U.S. states. Since 2013, Brian has been a member of Million Dollar Round Table, a designation for the top 1% of financial advisors worldwide. Brian has been featured in Yahoo! Finance, Money.com, Entrepreneur.com, Life Happens, Forbes, MSN, and Good Financial Cents. Brian’s goal is to show customers the best products, the quickest answers to their questions, and provide expert advice.
Lisa worked as a medical claims specialist for five years, adjudicating claims, developing appeals training programs and liaising with insurance auditors. As a full-time freelancer, she now completes work that includes writing and fact-checking life and health insurance content for a variety of online publications.
