Updated: September 11, 2025
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What it is: Term life insurance gives you a death benefit (your coverage amount) protection for 10 to 40 years as long as you pay your premiums.
You pay fixed monthly term life insurance premium, and beneficiaries receive a tax-free payout if you die during the term.
Healthy 25-year-olds can get $250,000 coverage for as little as $9 monthly; 35-year-olds pay around $15 monthly. Term life cost increases as you age or become unhealthy.
Who should buy it: Term life is a good option for parents, homeowners, and anyone with temporary financial obligations like mortgages or dependents. Term life is less complex and cheaper than permanent life insurance options like whole life.
Term life insurance is financial protection for your family or dependents at a specified coverage amount (called the death benefit) during a period of between 10 and 40 years.
This simplicity makes term life insurance the most affordable type of life coverage. You pay a fixed monthly or annual premium, and if something happens to you during the term, your family receives the full death benefit. If you outlive the policy term, coverage ends and you won't get money back.
These terms help you navigate term life insurance decisions more confidently:
The tax-free money your beneficiaries receive if you die during the term in your policy. Also called the face amount or coverage amount.
Your monthly or annual payment to keep the policy active. Term life premiums stay at the same cost each year throughout the term period.
How long your coverage lasts, typically 10, 20, or 30 years with a small number of companies offering 40 year terms. Longer terms cost more but provide price stability.
The person or people who receive the death benefit from your term life insurance policy. You can name multiple beneficiaries and specify what percentage each receives.
The right to change your term policy to permanent life insurance without a medical exam, available until age 65 or 70.
The option to extend your term life policy after it ends, though premiums increase based on your current age.
Term life insurance follows a straightforward process: you apply for coverage, pay regular premiums, and your beneficiaries receive a death benefit if you die during the term.
The process starts when you choose your coverage amount and term length. Most people select 10, 20, or 30-year terms based on how long they expect to have financial dependents or major debts. You'll complete an application asking about your health, lifestyle, finances, and family medical history.
The application process involves:
Once approved, you'll receive your policy and begin paying premiums. Your rate stays locked in. For example, a 35-year-old paying $25 monthly will pay that same amount until the 20-year term ends.
How term life insurance works
A 32-year-old teacher with two young children and a $200,000 mortgage is buying term life insurance. She applies for a $500,000 20-year term policy and gets approved at $28 monthly after a simple medical exam.
For the next 20 years, Maria pays $28 each month to keep her policy active. If she dies anytime during this period, then her beneficiaries receive the full $500,000 tax-free. This money could pay off the mortgage, cover childcare costs, and replace her income until her children are financially independent.
If Maria lives beyond age 52 when the term ends, her coverage stops. She can then renew at much higher rates based on her current age and health, convert to permanent life insurance, or let the coverage lapse if she no longer needs it.
Term life insurance comes in different lengths to match your financial obligations for dependents. The most common options are 10, 20, and 30-year terms, but 15,25, and 40-year terms are also available.
10-year term life insurance is the lowest cost but require frequent renewal decisions. Best for short-term debts or bridge coverage. A healthy 30-year-old pays an average of $12 monthly for $250,000 coverage.
20-year term life offers a balance affordability with long-term protection. Most popular choice for families and homeowners. The same coverage costs about $22 monthly and worth the extra $10 for price stability over a longer period.
30-year term life insurance gives buyers coverage for a longer period and is best for young parents who want coverage through their children's college years. Coverage costs about $28 monthly for young parents.
Term life insurance costs less than most people expect and can cost as little as $8 per month for young applicants. A healthy 40-year-old male can get $250,000 of coverage for as little as $18 monthly, while $1 million of coverage costs around $53 monthly for 10-year terms.
Your exact premium depends on your age, health, coverage amount, and term length. The younger and healthier you are when you apply, the less you'll pay throughout the entire term. Learn more about how much life insurance costs.
| 30-Year-Old | $14 | $20 | $35 |
| 40-Year-Old | $18 | $29 | $53 |
| 50-Year-Old | $37 | $65 | $117 |
| 60-Year-Old | $76 | $141 | $271 |
| 70-Year-Old | $204 | $410 | $719 |
| 30-Year-Old | $17 | $28 | $50 |
| 40-Year-Old | $26 | $44 | $83 |
| 50-Year-Old | $58 | $106 | $203 |
| 60-Year-Old | $150 | $286 | $556 |
| 70-Year-Old | $752 | $1,481 | $2,988 |
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Rates updated:
Sep 14, 2025
Term life insurance is the obvious choice for most people who need life insurance coverage. Its low cost and high coverage amounts make it ideal for families, homeowners, and anyone with financial dependents.
Term life insurance makes sense for people with temporary financial obligations and dependents who rely on their income. If someone depends on your paycheck or you have debts that would burden your family, term life gives you peace of mind at an affordable cost.
Needs coverage to protect each other from joint debts like student loans, car payments, or a new mortgage. Even without children, losing a partner's income could make it impossible to maintain your lifestyle or keep your home.
Represent the classic term life insurance buyers. Children need financial support for 18+ years, and term life can replace lost income, cover childcare costs, and fund future college expenses. A 20 or 30-year term aligns perfectly with children growing up and becoming financially independent.
Even without a paycheck, stay-at-home parents provide enormous economic value. Term life coverage can help the surviving parent afford childcare or household support (or take time off work) if the caregiver passes away.
Single parents face unique challenges since they're the sole financial provider. Term life can replace income, cover childcare, and ensure children's needs are met through adulthood without relying on extended family or government support.
May need term life to fund buy-sell agreements, cover business loans, or compensate for lost key person income. Term life insurance can keep a business running smoothly during a difficult transition period.
You probably don't need term life insurance if:
The main difference between term and whole life insurance comes down to cost and duration. Term life provides temporary coverage at low cost, while whole life offers permanent protection with higher premiums and cash value accumulation.
Coverage Length | Fixed term, usually 10 to 30 years | Covers you for life as long as premiums are paid |
Cost | Lower premiums, especially for younger applicants | Higher premiums due to lifelong coverage and added features |
Cash Value | None, pure death benefit only | Includes a cash value component that grows tax-deferred and can be borrowed against |
Flexibility | Simple, fixed premiums and benefit | Some policies (like universal life) allow flexible payments and benefit adjustments |
Purpose | Best for temporary needs like income replacement or mortgage protection | Better for estate planning, lifelong dependents or building tax-deferred savings |
Term life is the more popular policy type choice. Whole life insurance works better than term life for specific situations where you need permanent coverage or want to combine insurance with forced savings. Consider whole life if you:
Wealthy individuals often buy whole life for estate planning, ensuring their heirs receive tax-free death benefits even if they live to 100.
Which Type Should You Choose? Level term life insurance works for most people. Consider other types only for specific needs like mortgage protection (decreasing term) or as a supplement to employer coverage (group term).
Your life insurance premium and death benefit stay the same throughout the entire term. This is the most common term life type and what most people should choose. Simple, predictable, and covers most families' needs..
Your premium stays the same but the death benefit gets smaller each year. Works well for mortgage protection since the coverage decreases as your loan balance drops. Cheaper than level term but limited use cases.
With this type, the death benefit rises over the policy term, typically to offset inflation or increased future expenses. It can be useful for young families anticipating growing financial responsibilities like education or care costs.
Convertible policies allow you to switch to permanent life insurance without a medical exam. It's a flexible option for people who may want lifelong coverage in the future but can't afford permanent insurance now. Converted policies often come with higher premiums.
These policies allow you to renew your coverage at the end of each term without a medical exam, though premiums increase with age. Annual renewable terms are most common, but some insurers offer longer increments.
Employer-provided coverage, often 1-2 times your salary. It's free or cheap but has major limitations: coverage ends when you leave your job, you can't take it with you, and amounts are usually limited. Good as extra coverage, not your primary policy.
Refunds all your premiums if you outlive the policy term. Sounds appealing but costs 2-3 times more than regular term insurance. Most people get better value buying regular term and investing the difference.
Finding the best term life insurance policies depends on individual circumstances and specific financial needs.
Calculate how much coverage your family would need to replace your income, pay off debts, and cover major expenses. A common starting point is 10 times your annual income, but consider your specific situation:
Match your term length to how long you expect to have financial dependents:
Get quotes from multiple insurers since rates vary significantly between companies. You can:
Don't just compare prices - also consider the company's financial strength ratings and customer service reputation.
You'll answer detailed questions about:
Be completely honest on your application. Lying can void your policy and leave your family without coverage.
Many insurers now offer coverage without medical exams for healthy applicants under certain age and coverage limits. If an exam is required:
The insurance company reviews your application and medical information. This process typically takes:
You may need to provide additional information or medical records during this time.
Once approved, you'll receive your policy documents. Coverage typically begins when you:
Term life insurance gives you the most coverage for the least money. If you have dependents or debts, it's the obvious choice. Healthy 30-year-olds can get $500,000 coverage for around $25 monthly.
Choose level term coverage for 20 or 30 years with enough death benefit to replace your income and cover major debts. Don't wait because rates increase with age and health problems can make coverage expensive or impossible to get.
Buying term life insurance is easier than purchasing other types of life insurance, but you may still have questions throughout the process.
Yes, you can cancel term life insurance anytime without penalties. Simply stop paying premiums and coverage ends. You won't get any money back from previous payments.
No, you don't get money back with standard term life insurance. The coverage simply ends when the term expires. Some policies offer "return of premium" features that refund your payments, but these cost much more upfront.
Most policies have a 31-day grace period. If you pay within that time, coverage continues. If you don't pay within the grace period, the policy lapses and coverage ends.
No, life insurance death benefits are generally tax-free to beneficiaries. If the policy was part of your taxable estate, estate taxes might apply to very large policies.
Yes, but policies have a two-year waiting period. If suicide occurs within the first two years, the policy typically only returns premiums paid. After two years, it pays the full death benefit.
Yes, but you'll pay higher premiums or face coverage limitations. Some conditions like controlled diabetes add 25% to 50% to standard rates. Severe conditions might require specialized high-risk insurers.
Term life insurance pays the death benefit regardless of how you die (illness, accident, natural causes). Accidental death insurance only pays if you die from an accident, making it much cheaper but with very limited coverage.
Yes, you can own multiple term policies from different insurers as long as the total coverage amount is reasonable compared to your income. This strategy, called “laddering.”
About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.
