How does term life insurance work?

Term life insurance is a type of temporary insurance that protects you for a selected period of time.

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Subtracting a life insurance the policy ensures that your loved ones have financial support if you die suddenly. You can also use life insurance as an investment vehicle, a source of cash, or a way to pay off debts you’re leaving behind.

The exact benefits will depend on type of life insurance policy you buy though – and there are plenty of options to choose from. Probably the most popular option is term life insurance. Term life insurance is one of the simplest and cheapest forms of life insurance on the market, so if you’re thinking about getting one, it helps to understand how it works.

Get started by getting a free quote so you know exactly what to expect.

How does term life insurance work?

Term life insurance is a type of temporary life insurance. It covers you for a set period of time – usually 10, 20 or 30 years. Then, if you die during the coverage period, your beneficiaries receive a death benefit that they can use as financial support or to pay for funeral expenses, medical bills or debts you leave behind (like a mortgage loan, for example).

Some term life insurance policies also have a decreasing death benefit as you get further into your policy. Others may be “convertible” policies, meaning you can convert them into whole life insurance a policy with a cash value component that increases over time.

What does term life insurance cost?

The exact premium you will pay for a term life insurance policy depends on your age, the term of your policy, your health, gender and other factors. According to data from the Progressive and Fidelity Life Association, average costs for a 10-year $250,000 policy looks like this:



















Note that these are averages from just one company. Premiums can vary quite a bit from one insurance provider to another, so be sure to compare at least a few term life insurance providers before deciding where to get your policy.

Find out how much a term life insurance policy would cost by getting a free price estimate now.

Who benefits from term life insurance policies?

Term life insurance plans are best for people who want coverage for a specific, short-term goal—perhaps to pay off a mortgage loan or ensure their children are supported until age 18 or through college.

Because term life insurance policies are generally more affordable than other types of life insurance policies, they are also suitable for those who are on a budget or who want the protection of life insurance without a large financial investment.

When to explore other options

Term life insurance policies are not right for everyone. If you want lifetime protection, for example, term life may not be suitable. Also, if you want a policy that has cash value that you can withdraw from, or one that includes an investment or savings component, term life isn’t it either. In these cases, you may want to explore options such as whole life insurance, universal life insurance or variable life insurance instead.

If you’re not sure which type of life insurance is right for your needs and budget, contact an independent insurance agent. They can help you determine the insurance policy and coverage size this is right for you. You can also get a free online quote to measure yourself against, or use the table below to compare some of the best providers on the market.

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