Term Life Insurance Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Comparing Types of Life Insurance Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: On This Page
Stígur Már Karlsson /Heimsmyndir/Getty Images September 27, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Carol Pope is an insurance writer for Bankrate and prior to joining the team, she spent 12 years as an auto insurance agent. During this time, she sold, serviced and underwrote auto insurance for people across the country. She also has experience selling supplement coverage such as umbrella insurance. Maggie Kempken is an insurance editor for Bankrate. She helps manage the creation of insurance content that meets the highest quality standards for accuracy and clarity to help Bankrate readers navigate complex information about home, auto and life insurance. She also focuses on ensuring that Bankrate’s insurance content represents and adheres to the Bankrate brand. Kenneth Chavis IV is a senior wealth manager who provides comprehensive financial planning, investment management and tax planning services to business owners, equity compensated executives, engineers, medical doctors and entertainers. Bankrate logo The Bankrate promise
At Bankrate, we strive to help you make smarter financial decisions. To help readers understand how insurance affects their finances, we have licensed insurance professionals on staff who have spent a combined 47 years in the auto, home and life insurance industries. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation of how we make money. Our content is backed by LLC, a licensed entity (NPN: 19966249). For more information, please see our Insurance Disclosure. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our insurance team is composed of agents, data analysts, and customers like you. They focus on the points consumers care about most — price, customer service, policy features and savings opportunities — so you can feel confident about which provider is right for you. We guide you throughout your search and help you understand your coverage options. We provide up-to-date, reliable market information to help you make confident decisions. We reduce industry jargon so you get the clearest form of information possible. All providers discussed on our site are vetted based on the value they provide. And we constantly review our criteria to ensure we’re putting accuracy first. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Bankrate logo Insurance Disclosure
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. While there are a few different types of life insurance policies available, two of the most common are term life and permanent life. Although term life insurance is almost always cheaper than permanent life, it lacks some essential benefits that permanent life can afford you. However, whether the extra cost outweighs the benefits depends on your needs and financial goals. Knowing the differences in how these policies work can empower you to make an informed decision when shopping for new coverage. Bankrate’s insurance editorial team breaks down term life insurance to help you better understand if this is right for you. This advertising widget is powered by HomeInsurance.com, a licensed insurance producer (NPN: 8781838) and a corporate affiliate of Bankrate. The offers and clickable links that appear on this advertisement are from companies that compensate Homeinsurance.com LLC in different ways. The compensation received and other factors, such as your location, may impact what ads and links appear, and how, where, and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available to you as a consumer. We strive to keep our information accurate and up-to-date, but some information may not be current. Your actual offer terms from an advertiser may be different than the offer terms on this widget. All offers may be subject to additional terms and conditions of the advertiser. Compare life insurance providers quickly and easily
See which provider is right for you. The amount of coverage you need depends on many factors, including your age, income, mortgage and other debts and anticipated funeral expenses. Whole life insurance combines life insurance with an investment component. Coverage for life Tax-deferred savings benefit if premiums are paid 3 variations of permanent insurance: whole life, universal life and variable life include investment component Term life insurance is precisely what the name implies: an insurance policy that is good for a specific term of time. Fixed premium over term No savings benefits Outliving policy or policy cancellation results in no money back Find matches Powered by HomeInsurance.com (NPN: 8781838) This advertising widget is powered by HomeInsurance.com, a licensed insurance producer (NPN: 8781838) and a corporate affiliate of Bankrate. HomeInsurance.com LLC services are only available in states where it is licensed and insurance coverage through HomeInsurance.com may not be available in all states. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. Bankrate Why Lemonade? It's a fresh twist on life insurance: easy, accessible and affordable. See more providers in Choose from insurers in Show More Lightbulb Key takeaways Term life insurance only stays in effect for a predetermined number of years, such as 10 or 30 years, unlike permanent life policies. 99 percent of all term policies never pay a death benefit, because most term policyholders stop paying their premium, causing their policy to lapse. Term policies are around three times cheaper than permanent life insurance, on average, because the chance of a payout on behalf of the policyholder is less likely. If you want to see a return on payments towards a term life insurance policy, you may want to look into conversion riders or return-of-premium riders. What is term life insurance
Term life insurance is a type of policy that lasts for a predetermined period of time, rather than your entire life. When purchasing a term life policy, you’ll choose a policy term, most commonly between 10 and 30 years. If the insured passes away within that term, their beneficiaries will receive a . To help understand how term life insurance works, imagine you purchase a 10-year term life insurance policy. During that decade, you would pay your monthly or annual premium on time. If you were to pass away within that 10-year period, your beneficiaries would receive a death benefit. If the insured does not pass away within the policy term and the coverage expires, the policy will end and the beneficiaries will not receive a death benefit when the insured passes away. However, there are exceptions to this scenario. Many of the offer specialized , like conversion and return-of-premium riders, that tweak the way term life insurance policies work. If you are purchasing term life insurance, you may want to speak with your agent about what riders are available for your specific policy. Advantages of term life insurance Disadvantages of term life insurance Cheaper than permanent life insurance on average No cash value component or investment potential to build wealth Conversion and return-of-premium riders can add flexibility and peace of mind Only covers a specified time period Gives families the ability to cover significant financial liabilities that will eventually expire after a set period of time, such as mortgages and tuition Sunk cost if you outlive the policy Advantages of term life insurance policies
When choosing life insurance, it’s important to know how policies compare. Term life insurance has a couple of key advantages that make it an attractive option for those who need a larger death benefit for a specific period of time. It is typically the cheapest type of life insurance, especially for younger people or new parents. The larger death benefit at a reasonable price can provide for children dependents if something happens to the parent(s) earlier than anticipated. Many financial planners encourage people to buy term life insurance and invest the money saved by not purchasing more expensive permanent life insurance. For policies with level premiums, the cost will not increase with age for the policy’s life as it does with some other life insurance options. Learn more: Disadvantages of term life insurance policies
Term life insurance does have a few limitations to keep in mind. For example, term life insurance policies pay out a death benefit when the insured passes away, but these policies do not include a . Whole life insurance policies, on the other hand, typically include a cash value account that may accumulate limited interest and capped returns. Some permanent life insurance policyholders use their cash value accounts to build wealth, but that option does not exist with a term life policy. Another potential downside to having a term life insurance policy is that it only remains in effect for a certain period of time. Because policyholders can outlive their policies, there’s a chance that the death benefit will never be paid out. In fact, a indicates that 99 percent of all term policies never pay out a death benefit. However, that’s because most term policyholders don’t pay their premiums and let their policies lapse, not because they outlive the policy term, according to Entrepreneur. Learn more: Types of term life insurance
There are several different term life insurance options, and some offer more guarantees than others. Usually, the more guarantees the policy offers, the more expensive the policy is. Here is a breakdown of the major types of term life insurance policies: Level term insurance: Both the premiums and the death benefit remain constant over the policy’s life with this form of term coverage. Level term insurance usually lasts for anywhere from 10 to 30 years. Decreasing term insurance: This type of term insurance, usually used to cover a shrinking debt such as a mortgage, is typically less expensive because the death benefit slowly decreases over time. Guaranteed renewable term insurance: This type of term coverage allows the policyholder to renew the policy at the end of the term without having to undergo a medical exam or prove insurability again. It is more expensive overall, and it is important to note that the policy premiums will still increase with each successive term. A yearly renewable term is a form of guaranteed renewable term coverage. Convertible term insurance: If you purchase a conversion rider and outlive your policy term, your coverage would turn into a permanent life insurance policy. Typically, you will not have to undergo another medical exam during policy conversion. Keep in mind that your premium or death benefit amount will change based on your age at the time of conversion. For example, if you wish to continue paying around the same premium, your death benefit would decrease, whereas you’d pay more to maintain around the same death benefit. Return-of-premium term insurance: Some policyholders may be worried about signing up for a term policy, outliving their term and “wasting” the premiums they paid over the course of the policy term. This specialized rider provides a partial or full refund if you outlive the policy term. However, that rider will cost you extra during the policy term. How much does term life insurance cost
Term life insurance premiums are calculated based on the age and health of applicants. Because of this, varies but is typically significantly cheaper for younger applicants. Age and health are the main determinants of your premium, and the insurance company you choose won’t generally affect your rates much. If you get quotes for the same coverage from multiple providers, be prepared for the quotes to be similar. The primary reason to is based on what type of policy riders you may need, how positive the customer satisfaction may be or what the insurer’s financial strength ratings are compared to other insurers. Learn more: Will I get my money back at the end of my term
Unless you purchase a return-of-premium term life insurance policy, you will not get any money back at the end of the term. Paying premiums without receiving a death benefit is one of the potential disadvantages of purchasing term life insurance. A return-of-premium rider would increase the cost of your term life insurance, but would allow you to recoup a portion or all of your paid premiums. If you want to receive money back in the event that you outlive your policy term, you may want to discuss this option with your life insurance agent. How much term life insurance do I need
Deciding how much hinges on your financial goals and specific situation. For instance, a parent of a young child may want to purchase a life insurance policy with a 15-year term. A term of this length could make the most sense as it could ensure that their child will be financially secure if the parent passes away while the policy is in place. On the other hand, a childless couple with 10 years left on their mortgage may only want a term life insurance policy to be active while they are still paying off their home. Some other factors to consider when determining your life insurance coverage needs include: What is your yearly income and what are your expenses? How much room do you have in your budget for life insurance? Are you the sole breadwinner? If not, does your spouse or partner make enough to cover your family’s current and future expenses if you aren’t there? How many children do you have, and what are their ages? Do you plan to cover their higher education costs? Are you a caretaker for any disabled family members? Do you have a mortgage or other debts? If so, how many years will it take to be debt free? How much financial help would your spouse need to keep your home afloat if you passed away? It’s essential to consider your coverage needs to keep your life insurance premium within budget. If you carry too much coverage, you could find it challenging to keep up with your life insurance bill, putting yourself at risk of policy cancellation. If you don’t have enough coverage, your beneficiaries may struggle financially after your death. A can help guide you on your life insurance shopping journey, as can a consultation with a certified financial planner. Frequently asked questions
What happens to term life insurance at the end of the term
At the end of a term life insurance policy’s term, most plans will expire; however, policyholders may have the option to either renew the policy for a predetermined term of their choosing or convert the policy to a permanent plan, if they have elected these options at the onset of their policy. While letting the plan expire in most term policies means losing the money paid into premiums, some providers offer “return-of-premium” options that allow people to pay higher premiums in exchange for the option to have some or all premium payments returned if they outlive their term.
Can I take a life insurance policy out on anyone
While it is possible to , there are some stipulations. For instance, there must be insurable interest between the person purchasing the policy and the person being insured, such as business partners, spouses, parents or children. The person purchasing the policy must prove that the death of the insured person would have an adverse financial impact on them. Additionally, the insured person would also need to provide their consent, as you cannot take out a policy on someone without their knowledge or agreement.
Who should I choose as my life insurance beneficiary
is a personal choice. Many choose spouses, children, parents or a trust for the benefit of a family member to be their life insurance beneficiaries, but no rules dictate that these are your only options. Your life insurance beneficiary doesn’t have to be a person at all — you can choose to list a church or charity as your beneficiary if you wish. One of the most important things when selecting a life insurance beneficiary is remembering to do it. Forgetting to name a life insurance beneficiary can cause financial hardship for the person (or people) you thought would be collecting your death benefit. SHARE: Carol Pope is an insurance writer for Bankrate and prior to joining the team, she spent 12 years as an auto insurance agent. During this time, she sold, serviced and underwrote auto insurance for people across the country. She also has experience selling supplement coverage such as umbrella insurance. Maggie Kempken is an insurance editor for Bankrate. She helps manage the creation of insurance content that meets the highest quality standards for accuracy and clarity to help Bankrate readers navigate complex information about home, auto and life insurance. She also focuses on ensuring that Bankrate’s insurance content represents and adheres to the Bankrate brand. Kenneth Chavis IV is a senior wealth manager who provides comprehensive financial planning, investment management and tax planning services to business owners, equity compensated executives, engineers, medical doctors and entertainers.