Insurance solutions
Term life insurance
Term life insurance covers you for a set number of years and pays a death benefit if you die during that period. It is the least expensive way to buy a large amount of coverage, and for most working families it is where the conversation should start.
The basics
What term life insurance is
You choose a term — commonly 10, 20, or 30 years — and a death benefit, such as $500,000. You pay a level premium for the length of the term. If you die during the term, the carrier pays the death benefit to the beneficiary you named. If you are still alive when the term ends, the coverage expires and nothing is paid out.
That is the whole product. There is no cash value, no investment component, and no account balance building up inside it. Term life does one job: it replaces money your family would lose if you died before you were done providing it.
Because it does only that one job, it costs far less per dollar of death benefit than any permanent policy. A young, healthy person can often cover a mortgage and a decade of income for less than most monthly subscriptions cost combined — though the actual figure depends entirely on underwriting, which is why we do not publish rates.
Mechanics
How term life actually works
Applying. You answer health and lifestyle questions. Most fully underwritten policies include a short paramedical exam — height, weight, blood pressure, blood and urine samples — usually done at your home for free. The carrier also reviews your prescription history, motor vehicle record, and a database of prior insurance applications.
Underwriting. The carrier assigns you a rate class. Preferred Plus, Preferred, Standard, and various substandard classes each carry a different price for the identical death benefit. This is where independent representation earns its keep: carriers weigh conditions differently, and the company that rates a well-controlled condition most favorably is often not the company with the best advertised rate.
In force. Once the policy is issued and the first premium is paid, the coverage is active. Your premium will not change for the length of the term. Contestability applies for the first two years, meaning the carrier can investigate and deny a claim if the application contained a material misstatement — which is exactly why answering honestly about tobacco use and health history matters more than getting a slightly better rate.
Claim. Your beneficiary files a claim with a death certificate. Most claims on in-force policies past the contestability window are paid within weeks.
Fit
Who term life is right for — and who it is not
This probably fits you if
- People depend on your income and would struggle without it.
- You have a mortgage, business debt, or loans someone co-signed.
- You have children at home, or you are supporting a parent.
- You want the largest death benefit your budget allows, and you would rather cover the risk properly than buy a smaller permanent policy.
- You are early in building wealth and expect your finances to look materially different in twenty years.
This probably does not fit you if
- You need coverage that is certain to pay out whenever you die, such as for estate liquidity or a special-needs dependant. Term will very likely expire first.
- You specifically want a policy that builds cash value you can borrow against. Term has none.
- You are older and primarily want to cover a funeral and final bills. A smaller final expense policy is usually a better match.
- Nobody would suffer financially if you died. Coverage you do not need is not a bargain at any price.
Cost
What drives the price
We do not publish premiums. Every policy is individually underwritten, so any figure printed on a website is either a best case that will not apply to you or a number designed to get you on the phone.
Price is driven by, roughly in order of impact:
- Age. The single largest factor. Premiums are based partly on your age, so the same policy costs more each year you wait.
- Tobacco use. Carriers price tobacco use very differently from non-tobacco, often at double or more.
- Health. Your rate class comes out of underwriting.
- Death benefit and term length. More coverage for longer costs more, though larger policies often have a lower cost per thousand.
- Sex. Carriers use different mortality tables for men and women in most states.
What does not drive price: how good a negotiator you are. Life insurance rates are filed with state regulators. The same policy from the same carrier costs the same whoever sells it to you, which means the value an agent adds is entirely in matching you to the right carrier and getting the underwriting right.
Compare
Term life versus permanent coverage
The honest comparison is not which product is better, but which job you are hiring it to do.
Term versus whole life. Whole life insurance lasts your entire life, has a level premium, and builds guaranteed cash value. It costs substantially more per dollar of death benefit. If certainty of payout matters more than the size of the payout, whole life is the better tool. If protecting your family's standard of living for the next twenty years matters most, term buys far more of that protection.
Term versus indexed universal life. Indexed universal life is permanent coverage with flexible premiums and cash value credited using a market index. It is more complex and requires consistent funding to work as intended. It is not a substitute for term when the goal is simply a large death benefit for a defined period.
Plenty of families hold both: a large term policy covering the working years, and a smaller permanent policy that will still be there afterwards. If your term policy includes a conversion option, that path stays open without new underwriting.
Ready to see real numbers for your situation? Request a free quote or compare all of our coverage options.
Common questions
Questions about term life insurance
What happens when the term ends?
The coverage stops and the premiums stop with it. Most policies let you renew year to year after that, but at a much higher price based on your age at renewal, so renewing is rarely the plan.
Many policies also include a conversion option, which lets you convert some or all of the death benefit into a permanent policy without a new medical exam. If that matters to you, ask about it before you apply, because conversion terms vary a lot between carriers.
Do I get any money back if I outlive the policy?
Not with standard term life. You paid for coverage during the years you needed it, and you got it. That is the trade-off that makes term the least expensive way to buy a large death benefit.
Return-of-premium term exists and refunds your premiums if you outlive the term, but it costs considerably more each month. Whether that is worth it depends on what you would otherwise do with the difference.
What term length should I choose?
Match the term to the obligation. If your youngest child is two, a twenty-year term covers you until they are out of the house. If you have twenty-three years left on a mortgage, a twenty-five year term covers it with room to spare.
A longer term costs more per month but locks your rate for longer. Buying a term that ends before your obligation does is the more common mistake.
Can I be turned down?
Yes. Term life is medically underwritten, and carriers can decline an application or offer coverage at a higher rate class than you applied for. Health conditions, prescription history, driving record, and tobacco use all factor in.
Being declined by one carrier does not mean every carrier will decline you. Underwriting standards differ, which is one of the reasons working with an independent agent matters.
Is the death benefit taxed?
Life insurance death benefits paid to a named beneficiary are generally not subject to federal income tax. There are situations where that changes, including certain business-owned policies and larger estates. We are not tax advisors. Consult a qualified tax professional about your situation.
Coverage is subject to underwriting approval. Guarantees are backed by the claims-paying ability of the issuing carrier. Product availability, features, and rates vary by state and by carrier.
Let's build your legacy
Schedule your complimentary legacy planning session today.