We value our editorial independence, basing our comparison results, content and reviews on objective analysis without bias. But we may receive compensation when you click links on our site. Learn more about how we make money from our partners.
Term life insurance provides coverage for your family and anyone else that is financially dependent on you in the event that you pass away or are diagnosed with a terminal illness. This type of policy can provide a one-time payment to you or your beneficiaries if:
- You pass away during the specified “term” of the policy.
- You’ve been diagnosed with a terminal illness and are not expected to live for longer than 12 months — this is commonly known as an accelerated death benefit.
Keep reading to learn if term life insurance is right for you and what steps you can take to get quality coverage at the right price.
Compare quotes from 16 life insurance companies side by side.
- Compare multiple providers
- Calculate how much coverage you need
- Get a quote in 2 minutes
Why we like: Policygenius
Compare quotes from 16 life insurance companies side by side.
- Get the coverage amount and term that's right for you.
- Choose between term or whole life insurance.
- Easy online application process.
What's in this guide?
Compare term life insurance companies
What are the main features of term life insurance?
Term life insurance can help ease financial stress for your family and loved ones in the event that you pass away during the specified policy term. Some of the features that should be highlighted when shopping for term life coverage are:
- Lump sum benefit payout. When you take out a term life policy, you’re paying for an agreed benefit amount which will be paid to your family when you die. This payout allows your family to use the money to pay off any outstanding expenses, such as a mortgage or credit card debt. The benefit lets your family maintain their lifestyle and can help pay for future costs — such as your children’s education.
- Accelerated death benefit. If according to a medical doctor you’re expected to die within 12 months, your policy can pay out the benefit as an advance payment to help with final medical expenses.
- Can sometimes renew at the end of the term. Most policies can be renewed until you reach the age of 95, however, if you have a healthy retirement investment, you may not have to renew your policy.
- Few exclusions for not paying a benefit. Most plans won’t pay out if your death is the result of suicide. Apart from that, if you have been honest and detailed on your application, your family will usually be able to rely on a cash payout when you die. Make it a point to read your contract so that you’re aware of each situation where a benefit won’t be paid out.
- Additional options available. Since your death is not the only circumstance which could leave your family unable to rely on your income, you can add extras to your term life insurance policy such as critical illness and disability that will cover you in the event you suffer from severe sickness or are unable go back to work.
Can I bundle term life with other types of coverage?
Term life insurance can also be combined with other types of “living insurance”. Critical illness and disability provide a lump sum payment if you become disabled or suffer a traumatic event such as stroke, cancer or heart attack.
Is term life insurance tax deductible?
Because the benefit paid out in the event of a death is not taxed, your premiums are not tax deductible most of the time.
How long does a term life insurance policy last for?
Typically term life policies last for either 5, 10, 15, 20, 25, 30 or 35 years. The length of coverage you want depends on a number of factors but the most common policies are for 20-year and 30-year terms.
What happens at the end of my policy?
There is no surrender cash value in term life insurance. You pay a premium to have coverage in place and if the term runs out or you cancel your policy, you do not receive payment. Some insurers will give you the opportunity to renew your policy if you’re eligible.
How much will a life insurance policy cost?
No two policies will cost the same amount, as there are many factors that go into pricing out life insurance. The amount you pay for coverage will depend on:
- Your age. The older you are, the more you’ll pay due to the increased risk the insurer is taking on when giving you a policy.
- Your occupation. Jobs with a high risk factor will likely lead to a higher premium.
- If you smoke. Smokers are also considered high risk and will have to pay more to be insured.
- Gender. Rates vary between genders at different ages — women typically will receive lower rates.
- Pre-existing medical conditions. This is treated on a situational basis. It depends on the nature of the condition and current treatment.
Average term life insurance rates by age
Here’s the average monthly premium a 20-year term life policy would cost for both male and female applicants.
Prices shown in table are an average for non-smokers and should only be taken as a rough guide.
6 steps to get affordable term life insurance
- Don’t buy the first policy offered. Shop around a bit and have a good look at what’s available. Check out any reviews you find online and when you get down to business, make sure you thoroughly read the terms and conditions.
- Get an idea of how much coverage you actually need. Think about the people who are financially dependent on you and how much money would be needed for them to carry on without your income.
- Quit smoking. Not smoking for at least 12 months will lead to lower premiums. If the insurance industry feels they have to charge you a lot more because of the risk of smoking, that should be a sign to quit for good.
- Keep yourself fit and healthy. The less risk you pose to the insurance company, the less you’ll have to pay. If you’re seen to be knocking on death’s door, you’ll have to pay a substantial amount for coverage — you might even be declined.
- Buy a policy while you’re still young. Age is as important to an insurance company as is your health and lifestyle. The longer you put off buying life insurance, the more you’ll have to pay.
- Joint policies: Why not include your partner or spouse on your term life insurance policy? Not only will the both of you be covered, but you’ll also be eligible for discounts on your premiums.
What expenses can term life insurance cover?
When you die or if you become seriously injured, you want to make sure that you and your family can live life without having to worry about the burden of financial stress. Having a life insurance policy in place can help alleviate some pressure, here’s how:
- Replace an income for your partner or family that would be lost if you were to die
- Cover mortgage or rent
- Assist in paying for your child’s education
- Take care of other personal debts and taxes
- Pay for childcare if your spouse has to return to work
- Help with funeral costs and future financial planning
- Keep up with everyday living expenses
What are some drawbacks of term life insurance?
As with any insurance product, its tailored features can present certain disadvantages for people in certain circumstances. Make sure you’re aware of:
- No cash value. One reason that term life insurance is cheaper than whole life insurance is that it doesn’t accumulate an investment portion. If you out live the term of your policy, your beneficiaries don’t receive any cash out or death benefit.
- Rising costs that come with renewals. When the policy expires, you’ll need to take out a new policy to continue to be covered. However, since you’ll be older and may have seen other health and lifestyle changes, renewing your policy may be more expensive.
- Your premium reflects your lifestyle choices. Your premiums will be based on the level of risk you present to your insurer. If you smoke, engage in high-risk activities or work in a dangerous occupation, you can expect to pay more than others.
Here are some life insurance traps to watch out for
- Price will often reflect quality — know exactly what you’ll receive in the event of a claim
- Beware of excessive exclusions that won’t pay out on the policy
- Policies that are extremely inflexible with coverage amount and features
- Can you trust the insurer? The last thing you want is a nightmare at claim time because your insurer has gone bankrupt
Can I get coverage without having a medical exam?
Most life insurance companies will require you to complete a short medical questionnaire and if you meet their requirements, you may be approved for coverage without having a medical exam.
However, there are life insurance providers that specialize in insuring people who don’t want to take any sort of medical exam. It should be noted that these policies will be much pricier as the insurer is taking a risk on a person with an unknown medical background.
How do I compare policies?
Here are some key things to look out for if you’re ready to start comparing policies.
- Compare multiple policies. The rates offered shouldn’t be the only factor to consider when making a decision. Look for a policy that’s affordable and flexible, and offers built-in features and benefits.
- Check out the extras. Make sure that any extras purchased match your needs. The last thing you want is to be paying a higher premium for features you won’t use.
- Ability to bundle coverage? Find out if it’s possible to bundle your term life coverage with other types of living insurance.
Questions to consider when comparing life insurance
- What sacrifices can I make to save money on insurance?
- Who’s financially dependent on me?
- How are the premiums paid?
- Is this a reputable provider?
- How much coverage do I need?
- How long should I take out a policy for?
- How much money do I need for retirement?
- What are the terms and conditions?
What are common reasons people go without life insurance?
Most people are quick to insure their car or home before taking out life insurance. Why is this the case?
People argue that it’s because the benefits of life insurance are less tangible when compared to something like car insurance. While others choose to push the thought of actually needing life insurance to the back of their mind. Here are some common responses why people don’t have life insurance.
- “Nothing will happen to me.” While a sudden death isn’t likely, think of how your family would be taken care of in that event.
- “Life insurance is too expensive.” There are ways to get cheap coverage that allows you to make a small sacrifice for a greater peace of mind.
- “It’s just too complicated.” Yes, it’s a detailed product. However, it’s easy to speak to an adviser or research online to clear things up.
- “It’s only for families with kids.” Not true, there are options for couples as well. Singles can take advantage of products like critical illness and disability insurance.
Life insurance can suit a wide range of individuals and be a useful product that you should heavily consider if you have loved ones who financially rely on you. There are many different policies on the market that could be customized to fit the needs of you and your family to offer you peace of mind.
Read reviews, compare providers and go with the life insurance company that offers you the most affordable rates on a policy with the right amount of coverage.
Frequently asked questions
Ask an Expert