Term life insurance is the most straightforward form of life insurance — and for most people, it’s the only kind they need. Here’s everything you need to know.
What term life insurance is
Term life insurance covers you for a specific period — typically 10, 20, or 30 years. If you die during the term, your beneficiaries receive the death benefit (a lump sum payment). If you outlive the term, the policy ends with no payout. That’s it — there’s no investment component, no cash value, no complexity.
Why it’s cheaper than whole life
Whole life insurance costs 10–15x more than term for the same death benefit because it also functions as a savings vehicle with a cash value component. For most people, term insurance is the right choice — it covers the years when you have dependents and financial obligations, costs a fraction of the price, and the difference in premium can be invested separately for far better returns.
Sample rates for healthy non-smokers
- Age 25, $500,000 policy, 20-year term: $20–$25/month
- Age 30, $500,000 policy, 20-year term: $23–$30/month
- Age 35, $500,000 policy, 20-year term: $28–$40/month
- Age 40, $500,000 policy, 20-year term: $45–$65/month
The earlier you buy, the cheaper it is — rates are locked in at the age you purchase.
How much coverage you need
The standard recommendation is 10–12x your annual income. For a more precise calculation, add up: income replacement for 10 years, mortgage payoff, debt payoff, children’s education costs, and final expenses. Subtract your current savings and investments. That’s your actual coverage need.
How long a term you need
Choose a term that covers your period of maximum financial vulnerability. If you have young children, a 20–30 year term ensures coverage until they’re independent. If your mortgage has 15 years left and your kids are teenagers, a 15–20 year term may be sufficient.
Where to get quotes
Policygenius lets you compare quotes from multiple insurers in minutes. Haven Life, Banner Life, and Protective Life consistently offer competitive rates. Apply to at least three before choosing. Rates vary significantly between insurers for identical coverage.