Term Life Insurance Basics, Calculator, And Quotes

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Top 3 Insurance Companies For Term Life Insurance

  • Banner Life: They are an A+ Rated company that consistently has some of the best rates in the industry for term life insurance. They also have a guarantee issue child rider that is approved in most states to get coverage for your child.
  • Pacific Life: Another A+ Rated company that also has very competitive rates. What stands out with Pacific Life is that after the term is over, you can convert to a guaranteed universal life policy; most companies only offer a current assumption policy.
  • Corebridge: They are an A Rated company and also offer competitive rates. They are unique in that they offer term periods from 10YR, as well as 15YR, 16YR, 17YR, etc, up to 35YRS, which is unique because most companies only do 5YR increments on a term policy.  This allows the insured to tailor their term policy to meet a specific period of time, such as having 18 years left on a mortgage.

Compare Rates With Other Companies

Before buying a term life insurance policy, use a calculator to compare the costs and benefits of various options. This calculator will consider your age, health, and the amount of coverage you want to give you an idea of the premiums and the policy’s value over time. It also allows you to compare different types of life insurance, like universal and whole life, side by side. This comparison helps you see the strengths and weaknesses of each option, aiding you in choosing the best policy for your needs.

What is Term Life Insurance?

Term life insurance is a type of life insurance policy that provides coverage for a specific period, or “term.” If the insured person passes away during this term, a death benefit is paid out to the beneficiaries. It’s straightforward, without the bells and whistles of other insurance types.

Example: Sarah buys a 20-year term life insurance policy. Her beneficiaries receive the death benefit if she passes away within those 20 years. If she outlives the term, the policy expires.

How Does Term Life Insurance Work?

  • Premiums: You pay a set amount, known as a premium, either monthly or annually. This premium remains consistent throughout the term.
  • Term Length: Terms can range from 10 to 40 years. The longer the term, the higher the premium might be, as the insurance company is taking on a longer risk.
  • Death Benefit: This is the amount your beneficiaries will receive if you pass away during the term. You choose this amount when you buy the policy.

Example: John chooses a 10-year term life insurance with a death benefit of $500,000. He pays a monthly premium. If John passes away within those ten years, his family receives the $500,000. If he doesn’t, the policy ends, and no benefit is paid.

Why Choose Term Life Insurance?

  • Affordability: Term life insurance is often more affordable than whole life insurance. It’s a cost-effective way to ensure your loved ones are protected.
  • Simplicity: It’s easy to understand. You pay premiums for a set term; if you pass away during that term, a set amount is paid out.
  • Flexibility: You can choose a term that aligns with your needs, be it until your children are grown, your mortgage is paid off, or any other milestone.
Term Life Insurance Meaning

Term Life Insurance At A Glance

FeatureDescription
TypeLife insurance for a specific term
Coverage Duration1 to 30 years
PremiumsFixed, paid monthly or annually
Death BenefitSet amount chosen at policy start
ExpirationPolicy ends if you outlive the term

What is a Death Benefit?

When obtaining life insurance, the guaranteed death benefit is paramount; this is the lump sum your insurer will pay out to those closest to you if you pass away during the coverage period. Knowing they are cared for during such distress and sorrow can offer immense comfort.

Types of Term Life Insurance:

  • Level Premium Term Life Insurance: The same death benefit with consistent premiums throughout the term.
  • Decreasing Term Life Insurance: The death benefit decreases over time and is usually used for mortgage protection life insurance.
  • Yearly Renewable Term: The term renews annually, typically with higher yearly premiums.
  • Return of Premium Term Life Insurance: Refunds the premium payments if the insured person outlives the term.

Term Life Insurance Rates By Age And Gender

Life insurance rates vary based on age and gender. Men pay more for term life insurance than women on average.

This is because men have a shorter life expectancy than women. Life insurers consider this aspect, and men pay higher premiums than women of the same age.

AgeGender$250k$500k$750k$1,000,000
25Female$10.95$16.37$21.79$22.98
Male$12.30$19.08$25.86$30.54
35Female$12.45$18.20$24.54$30.53
Male$13.80$21.64$29.70$33.93
45Female$21.24$36.95$52.67$67.85
Male$26.19$46.67$67.24$87.81
55Female$45.37$84.36$123.78$158.80
Male$61.24$114.71$169.30$221.55

Term Life Insurance Rates By Policy Length

The lower the term length of a life insurance policy, the less you will pay in annual premiums.

After you have completed a medical examination and background check, the life insurance company gives you a health rating. The rating you receive right now affects the price of your life insurance policy. Each individual life insurance provider determines these factors, but they differ only slightly across the sector. Your ranking classification is impacted by blood pressure, smoking, and cholesterol levels.

10-Year Term Life Insurance Rates

Policy face valuePreferred plusPreferredStandard
$100K$15$17$21
$250K$22$24$33
$500K$34$43$60
$1M$57$72$109

20-Year Term Life Insurance Rates

The most common term life insurance policy on the market, the 20-year term plan, extends coverage further than its shorter 10-year counterpart but costs more each year.

These rules are typically suggested for young families with significant debt and expenses, such as mortgages and education loans, that would be more difficult to manage if one parent’s wage was missed.

The average 20-year term is adequate time for the family to pay their debts and decrease the chances that someone else will have to foot the bill in an emergency.

Policy face valuePreferred plusPreferredStandard
$100K$14$13$21
$250K$21$27$33
$500K$37$46$61
$1M$63$83$111

Pros And Cons Of Term Life Insurance

Pros (Benefits)Cons (Risks)
Provides financial security for loved ones during your death.Beneficiaries may not receive the full death benefit if premiums aren’t paid for the entire term.
Typically less expensive than other types of life insurance policies.Beneficiaries may not receive the full death benefit if premiums haven’t been paid for the entire term.
Beneficiaries may not receive a death benefit if they don’t die during the policy term.Some policies have expiration dates, leading to no death benefit if you don’t die within the policy term.
Offers additional features like riders for spouse or children coverage.It’s essential to understand all associated risks before purchasing.

Comparing Term Life with Permanent Life Insurance Policies:

Permanent Life Insurance Policy: Unlike term life insurance, types like whole life, variable life, and universal life policies offer coverage for the entire life of the insured and usually include a policy’s cash value component. These typically come at a higher cost and premiums than term life policies but offer lifelong coverage and can be a significant part of your personal finance portfolio.

Whats Term Life Insurance Mean

Conclusion

Term life insurance is a pivotal element in securing your loved one’s financial future. It offers a practical and affordable way to ensure your family can navigate life even after you’re gone. When deciding to choose term life insurance, consider the term length and coverage amount meticulously, consult with an insurance agent, and align the policy with your financial landscape.

Remember, this guide is designed to offer insights and support your journey in understanding life insurance. Securing the future for your loved ones begins with a step into knowledge and a keen understanding of your life insurance needs. As an experienced insurance agent, I’m here to help you navigate this journey, ensuring you feel confident and informed about your choices.

Term Life Insurance Quotes

Contact us if you need help purchasing a life insurance policy. The service is free of charge.

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Questions From Our Readers

What happens when your term insurance expires?

In most cases, when your term life insurance policy expires, you essentially become uninsured. If something were to happen to you after the policy term, your beneficiaries would not receive any death benefit. The coverage ends, and you’re no longer paying premiums.

Do you get money back after it has expired?

Standard-term life insurance policies do not offer a return of premiums at the end of the term. So, if you outlive your term life insurance policy, you generally do not get any money back unless you have a return of premium (ROP) term life insurance policy.

What happens after 20-year term life insurance?

After a 20-year term life insurance policy expires, the policyholder can either renew the coverage for a new term, convert to permanent insurance, or let the policy lapse without coverage or death benefit.

What happens if I live longer than my term life insurance?

If you live longer than your term life insurance, the policy will expire, and you will not receive a death benefit. Instead, the policyholder must purchase a new policy or opt for a different form of coverage.

Does term life insurance have cash value?

No, term life insurance policies do not have cash value. The premiums paid towards a term life insurance policy are solely used to provide death benefit coverage. Once the policy term ends, the coverage ends, and there is no cash value component. Term life insurance is designed to provide affordable life insurance coverage for a specific period, and the premiums are significantly lower than those of permanent life insurance policies.

What happens at the end of term life insurance?

When your term life insurance policy ends, you have a few different options. You can renew your policy, convert your policy, or let your policy lapse.

What is level premium term life insurance?

Level premium term life insurance is a type of life insurance policy where the premium payments remain consistent throughout the term. This allows policyholders to budget for their insurance premiums more quickly, as there won’t be any unexpected increases in their payment amounts. As the name suggests, it covers a specified term, such as 10, 20, or 30 years.

Which component increases in the increasing term insurance?

The death benefit is the main component of increasing term life insurance policy. As you age, the death benefit will increase, providing your loved ones with more financial protection in the event of your passing.

How much does life insurance cost for a 50-year-old male?

For a healthy 50-year-old man wanting a $500,000 policy, the average monthly premium for a 20-year term policy is $79.

How much does life insurance cost for a 50-year-old female?

For a healthy 50-year-old woman wanting a $500,000 policy, the average monthly premium for a 20-year term policy is $63.

How do I sell my term life insurance?

To sell your term life insurance policy, you can consider a life settlement or viatical settlement company. These companies purchase life insurance policies from policyholders for a lump sum. Research reputable companies, gather your policy documents, and compare offers. Remember that selling your policy may have tax implications and affect your beneficiaries.

Can I sell my life insurance policy if I’m a young retiree and in good health?

Selling your life insurance policy, a process known as a life settlement, is typically more challenging if you’re a young retiree in good health. Life settlements are generally more feasible for older individuals or those with health issues, as the potential payout is usually based on a shortened life expectancy.

Can I sell a term life insurance policy before the age of 65?

Yes, you can sell a term life insurance policy before the age of 65 through a process called a life settlement. However, this is more common with permanent life insurance policies. The ability to sell a term policy depends on its convertibility to a permanent policy, the terms of the policy, current health status, and finding a willing buyer.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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