Carrier vs. Carrier Comparisons
What You Should Know
- Term life insurance can last from five to 30 years
- Some term life insurance policies cost as low as $9/mo
- Seniors pay more for term life insurance
- Use term life insurance riders to cover gaps in coverage
Are you looking for the most affordable term life insurance? One of the most cost-efficient life insurance policies is term life insurance.
But what is a term life insurance policy, and how does term life insurance work? Don’t worry – we’re here to help.
Our guide explains everything you need to know about term life insurance policies, how much you’ll pay for term life insurance per month, and how term life insurance works.
Also, we'll show you the best life insurance companies in the United States.
After you learn more about a term life insurance policy and how it works, enter your ZIP code in the free search tool to compare multiple companies near you.
What is a term life insurance policy?
A term life insurance policy is life insurance coverage that lasts for a specific number of years. You’ll have an option of choosing your term life policy period after you’ve been approved.
Your term life insurance policy has a policy amount (also called death benefits). But to get approved for standard term life insurance, you need to get a medical exam and have it reviewed by a licensed life insurance agent.
What is a five-year term life insurance policy?
A five-year term life insurance policy provides life insurance coverage for five years. Usually, five-year term life policies don’t have higher policy amounts.
What is a 10-year term life insurance policy?
Ten-year term life insurance policies cover you for ten years. After that, policy limits are much higher, and some life insurance riders may become available.
What is a 20-year term life insurance policy?
A 20-year term life insurance policy gives you a larger window of life insurance coverage. Some life insurance companies may recommend death benefits equal to ten times your current salary.
What is a 30-year term life insurance policy?
Some life insurance companies provide 30-year term life insurance policies, which cover you for 30 years. Consider adding life insurance riders like return-of-premium to turn your term life insurance into an investment.
How do term life insurance policies work?
Term life insurance covers a fixed period. Your term life insurance length is determined by the policy term you’ve purchased.
For example, if you purchased a 10-year term life insurance policy, you’ll pay monthly life insurance rates for ten years.
Term life insurance policies provide death benefits to beneficiaries after you’ve passed away. Your beneficiaries receive the amount on your term life insurance policy. Your life insurance policy ends after the claim has been paid and after you’ve passed.
What are the advantages and disadvantages of term life insurance policies?
Term life insurance has some benefits and drawbacks. Let’s explore the pros and cons of term life insurance.
| PROS | CONS |
|---|---|
| No Commitment to Long Term Coverage | Limited Coverage Options |
| Cost-Efficient | Short Term Coverage |
| Low Starting Costs | No Accumulated Cash Value |
Term life insurance doesn’t have the long-term benefits of permanent life insurance policies, like whole life insurance and universal life insurance.
But suppose you need affordable term life insurance rates. In that case, shopping with term life insurance companies can save you hundreds of dollars per year.
How much are term life insurance policies on average?
On average, term life insurance rates are about $9 a month. However, term life insurance quotes are determined by age, gender, health, policy type, and the policy amount.
Therefore, your term life insurance rates may vary based on personal factors and the company providing the term life insurance policy.
Here’s a list of the best life insurance companies and their average term life insurance rates.
| COMPANIES | MONTHLY TERM LIFE INSURANCE RATES | A. M. BEST RATINGS |
|---|---|---|
| Allstate | $15 | A+ |
| Banner Life | $9 | A+ |
| Guardian Life | $10 | A++ |
| Haven Life | $11 | A++ |
| John Hancock | $11 | A+ |
| MassMutual | $10 | A++ |
| MetLife | $9 | A+ |
| Mutual of Omaha | $12 | A+ |
| Nationwide | $13 | A+ |
| New York Life | $11 | A++ |
| Principal | $9 | A+ |
| Protective | $9 | A+ |
| Prudential | $16 | A+ |
| State Farm | $15 | A++ |
| USAA | $12 | A++ |
Banner Life, MetLife, Principal, and Protective are the top life insurance companies that provide term life insurance at the average rate.
The A. M. Best ratings show that all companies meet obligations to customers and effectively pay out life insurance claims.
But the average rates are usually rates for younger policyholders. Seniors pay at least $35 more.
What are the different types of term life insurance policies?
If you’ve already looked around for term life insurance, you’ve probably seen various types of term life insurance policies. Check out this list of term life insurance policies to see what’s available.
- Convertible Term Life Insurance
- Decreasing Term Life Insurance
- Renewable Term Life Insurance
- No-Medical Exam Life Insurance
But what is a good term life insurance policy for you? Compare several term life insurance policies and see which one fits your needs best. You should learn more about them before you buy term life insurance.
What is a convertible term life insurance policy?
Convertible term life insurance allows you to turn your term life insurance policy into a permanent life insurance policy, such as whole life insurance.
What is a decreasing term life insurance policy?
Decreasing term life insurance is a renewable term life insurance policy that lowers coverage over time. As a result, your life insurance rates also fall to a more affordable rate.
What is a renewable term life insurance policy?
Renewable term life insurance policies let you renew your term life insurance before it ends. However, your rates will increase as you get older.
What is a no-medical-exam life insurance policy?
No-medical-exam life insurance (or simplified issue life insurance) is a term life insurance policy that doesn’t require a medical exam for coverage. But no-medical-exam life insurance is more expensive than standard term life insurance.
What is the grace period on a term life insurance policy?
The grace period for term life insurance policies is usually 30 to 31 days. However, each life insurance company is different. Some companies have grace periods as low as seven days.
Grace periods are the amount of time you have to pay your monthly life insurance rates after you’ve missed the payment due date. Missing too many payments results in bad standing with your life insurance company.
Can you sell a term life insurance policy?
The answer is yes. You can sell your term life insurance policy to a third party. However, term life insurance doesn’t have cash accumulation benefits unless you have a return-of-premium rider.
The surrender cash value for term life insurance settlements is much lower. Therefore, it may be more beneficial to convert your term life insurance into a whole life insurance policy.
Save Money by Comparing Insurance Quotes
Compare Free Insurance Quotes Instantly
Secured with SHA-256 Encryption
The Bottom Line on Term Life Insurance Policies
Term life insurance is one of the most versatile life insurance policies. However, it doesn’t have cash value accumulation like permanent life insurance.
Also, term life insurance is less expensive than whole life insurance, but it increases every five years. So to get the best term life insurance company, you’ll need to shop around.
Now that you know what a term life insurance policy is and how it works, use our free online search tool to locate the best companies in your area.
References: