What Is Term Life Insurance and How Does It Work?

Term life insurance provides financial protection for your family or dependents at a specified coverage amount (called the death benefit) for 10 to 40 years.

This makes term life insurance the most affordable type of life coverage. You pay a fixed monthly or annual premium, and if you die during the term, your family gets the full death benefit. If you outlive the policy term, coverage ends and you won't get money back.nual payment to keep the policy active. Term life premiums stay at the same cos

These terms help you navigate term life insurance decisions more confidently:

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.

Choose your coverage amount and term length first. Most people pick 10, 20 or 30-year terms based on how long they expect to have financial dependents or major debts. You'll complete an application about your health, lifestyle, finances and family medical history.

The application process involves:

• Health questionnaire about current and past medical conditions
• Medical exam (often waived for smaller amounts or younger applicants)
• Review of your driving record and credit history
• Income verification for larger coverage amounts

Once approved, you'll get your policy and start paying premiums. Your rate locks in. A 35-year-old paying $25 monthly will pay that same amount until the 20-year term ends.

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.

Term life insurance costs less than most people expect. According to MoneyGeek's analysis, young applicants can get coverage for as little as $6 per month (18-year-old female with a 10-year policy and $100,000 coverage).

A healthy 40-year-old male can get $250,000 of coverage for $22 per month, while $1 million of coverage costs around $70 per month for 10-year terms.

Your age, health, coverage amount and term length determine your premium. 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.

*Rates are based on average quotes for nonsmokers with average weight and health ratings. Actual costs will vary depending on your profile, lifestyle, term length and coverage amount.

Term life insurance offers the most cost-effective death benefit protection, making it ideal for families, homeowners and anyone supporting financial dependents. Weighing the advantages and limitations helps you make the right coverage decision.

You probably don't need term life insurance if:

• You have no dependents and minimal debt
• Your assets exceed your debts and final expenses
• You have enough savings to cover your family's needs
• You already have adequate coverage through work or other policies
• You're financially independent and your death wouldn't create hardship for others

Wealthy individuals with substantial assets may not need term life for income replacement but might consider it for estate tax planning or charitable giving strategies.

Retirees need less coverage as mortgages get paid off and children become independent. Seniors should maintain coverage for final expenses depending on their financial situation.

The main difference between term and permanent life insurance, such as whole life insurance, is cost and duration. Term life provides temporary coverage at low cost, while whole life offers permanent protection with higher premiums and cash value accumulation.

Term life is more popular. 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:

• Need coverage for your entire lifetime, regardless of when you die
• Want to build cash value you can borrow against
• Have estate tax concerns requiring permanent death benefit
• Prefer the certainty of fixed premiums that never increase
• Have maxed out other retirement savings options
• Want to leave a guaranteed inheritance to beneficiaries

Wealthy individuals often buy whole life for estate planning, ensuring their heirs receive tax-free death benefits even if they live to 100.

Term life insurance gives you the most coverage for the least money. If you have dependents or debts, it's the best choice. Healthy 30-year-olds can get a 10-year term policy with $500,000 coverage for around $20 (female) and $24 (male) per month, according to MoneyGeek's rate survey.

Choose level term coverage for 20 or 30 years with enough death benefit to replace your income and cover major debts. Don't wait. 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.

Term life insurance shoppers need reliable rate data to budget for coverage that protects their families. We built our analysis around the factors that determine what you'll actually pay.

Our quote analysis: We examined 248,399 life insurance quotes from 16 companies across 250 ZIP codes nationwide. All rates reflect 2025 data.

Sample profiles: We collected quotes for nonsmokers with average health.

• Men: 5 feet 9 inches tall, 160 pounds
• Women: 5 feet 4 inches tall, 120 pounds

These profiles represent typical applicants seeking coverage.

Why we varied the profiles: Your age, gender, height, weight, tobacco use and health rating all affect your premium. We modified each factor to show how rates change across different customer types, term lengths and coverage amounts. This approach reveals the real cost differences between a healthy 30-year-old and a 50-year-old, or between $250,000 and $1 million coverage.