Is Term Life Insurance Worth It in 2026?

Term life insurance covers you for a period of 10, 15, 20, 25 or 30 years. You pay monthly or annual premiums during this term, and the insurer pays a death benefit to your beneficiaries if you die while the policy is active.

Unlike whole life insurance, term life has no cash value component. You'll pay only for the death benefit protection. The coverage ends when your term expires, though many policies let you convert to permanent life insurance before the term ends.

Term life premiums stay level throughout your chosen term period. A 30-year-old who buys a 20-year term policy pays the same premium at age 30 and age 49. After the term expires, you'll need to reapply for coverage at your new health and age-based rates.

Term life insurance costs vary based on your age, gender, health, smoking status, coverage amount and health level. A healthy 40-year-old nonsmoker pays an average of $46-$55 per month for $500,000 of 20-year term coverage.

Longer term lengths increase premiums because the insurer takes on more risk over time. The difference between 10-year and 30-year terms can be substantial. A 30-year policy costs more than double a 10-year policy for the same coverage amount.

* Rates shown for 20-year term, $500,000 coverage policies for people of average height, weight and health.

Term life insurance works best for people with dependents who rely on their income and don't need permanent coverage.

Term life insurance works best for specific financial situations and life stages:

• Young families: Parents with children under 18 benefit from term coverage because their financial responsibilities decrease as children become independent, and they often need substantial coverage amounts of 10 to 12 times their annual income to replace lost earnings and cover expenses.
• Homeowners with mortgages: Term life insurance lets you buy high coverage amounts affordably while your mortgage balance is high to protect your family from losing the home if you die unexpectedly.
• People on a budget: People with limited budgets should choose term life over whole life because the lower premiums free up money for emergency savings, retirement contributions and other financial goals. You can always convert to permanent coverage later if your needs change
• Temporary needs: If you plan to become financially independent by retirement, you won’t need permanent coverage, since building sufficient wealth through investments and retirement accounts means your family won't need life insurance proceeds when you die.

Learn more: How Much Term Life Insurance Do You Need?

Term life insurance isn't necessary for everyone in every situation.

• Single people without dependents: Single people without dependents rarely need term life insurance unless they have co-signed debts or want to cover final expenses. Young adults living with parents and without major financial obligations can also wait to buy coverage.
• Wealthy individuals: People with sufficient assets to support their families don't need life insurance for income replacement, since life insurance is less important if your investments, savings and other resources exceed your family's needs.
• Permanent coverage seekers: Some people prefer whole life insurance for its guaranteed cash value growth and permanent coverage. Whole life makes sense for estate planning, business succession or leaving money to heirs regardless of when you die.

Term life insurance offers affordable coverage but ends after the term period expires. Consider the pros and cons of a term policy before deciding if it’s worth it for you:

Term life insurance works best as temporary protection while you build wealth and pay down debts. The low cost lets you maintain high coverage amounts during your peak earning years when your family depends on your income.

Choose a term length that covers your biggest financial obligations and select coverage equal to 10 to 12 times your annual income. Match your term length to your largest time-sensitive financial obligations. Parents with young children usually choose 20 to 30-year terms to cover the time until their kids become financially independent. People with 25-year mortgages should consider a longer 30-year term for extra protection.

Calculate your coverage needs by adding your annual income multiplied by 10, outstanding debts, and future expenses like college costs. Most families need $500,000 to $1 million in coverage, though high earners often need $2 million or more. 20-year terms offer the best balance of cost and coverage length. Buy coverage while you're young and healthy to lock in the lowest rates.

When your term policy expires, you lose coverage unless you take action before the term ends.

• Term policies often have a conversion option that lets you switch to permanent life insurance without medical underwriting. You have 60 to 90 days before expiration to convert part or all of your coverage. The permanent policy costs more but provides lifetime protection.
• You can also apply for a new term policy, though you'll need to complete medical underwriting again. Your premium will be much higher based on your current age and health status. A 50-year-old buying new coverage pays triple what they paid at age 30.
• Some insurers offer annual renewable term coverage after your original term expires, but premiums increase each year. This option works for temporary coverage but becomes expensive quickly.
• Many people don't need life insurance after their term expires because their children are independent and their mortgages are paid off. If you've built sufficient wealth through investments and retirement savings, your family may not need life insurance proceeds.
• Plan ahead by reviewing your coverage needs five years before expiration. This gives you time to convert coverage, apply for new policies while healthy, or determine that you no longer need protection.

Term life insurance is worth it for people with dependents who rely on their income. The affordable premiums let you buy high coverage during the time when you need it most.

Young parents, homeowners with mortgages and primary income earners benefit most from term coverage. The low cost compared to whole life insurance means you can afford adequate protection while building wealth through other investments.

The key is buying adequate coverage while you're young and healthy. A $500,000 policy might cost $50 monthly at age 30 but $200 monthly at age 45. Don't wait to protect your family's financial future.

Compare quotes from multiple insurers to find the best rates for your situation. Healthy adults can get approved quickly and start coverage within weeks.