None of us can predict the future—but don’t let that stop you from planning your finances for the people you love. Life insurance helps protect your family and financial goals in the event of premature death. It’s a means of providing for those who depend on you even after you’re gone.
There are many kinds of life insurance. This article offers a comprehensive guide to term life insurance. We’ll cover how it works, how much it can cost, how it compares to other policies and more.
What is term life insurance?
Term life insurance is a type of life insurance that provides coverage for a specific period, usually 10, 15, 20 or 30 years. If you die during the term and your premiums are up to date, your beneficiaries receive a death benefit. If the term ends while you're still living, the policy expires with no payout.
This type of insurance is often chosen for its affordability and simplicity. It’s designed to offer maximum protection at a lower cost, making it ideal for people who need coverage during key life stages, like raising children, paying off a mortgage or starting a business.
“We believe that your most important asset is the ability to earn income,” says Ryan Schwingler, an advisor groups business consultant at Thrivent. “Term life insurance can replace lost income in the event of an unexpected death, so families can maintain the lifestyle they’re accustomed to.”
How term life insurance works
When you purchase a term life insurance policy, you’ll make a few key decisions:
- Length of the term (e.g., 10, 15, 20 or 30 years)
- Coverage amount (the death benefit)
- Who you want your beneficiaries to be
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Once you select your policy, you typically pay a
If you pass away during the term, the insurer pays the agreed-upon death benefit directly to your beneficiaries. If you outlive the term, coverage ends, though many policies include options for renewal or converting to permanent coverage.
Types of term life insurance
There are several types of term life insurance, each designed to meet different needs. Understanding the differences can help you choose the right fit for your situation.
Common types:
Level term life insurance : Offers fixed premiums and a consistent death benefit throughout the term.- Decreasing term insurance: The death benefit decreases over time, often used to match a declining debt like a mortgage.
Convertible term life insurance : Allows you to convert your term policy into a permanent one without a medical exam.- Renewable term life insurance: Lets you renew your policy annually after the initial term ends, though premiums typically increase.
- Short-term life insurance: Provides temporary coverage for brief periods, such as during a job transition or while waiting for long-term coverage to begin.
How much term life insurance do you need?
There’s no one-size-fits-all answer, but a helpful starting point is to evaluate your income, debts, dependents and future financial goals. A common rule of thumb is purchasing coverage equal to 10–15 times your annual income. But coverage should reflect your family's actual needs:
- Current income and expenses
- Outstanding debts (like mortgage or student loans)
- Future costs (college, caregiving)
- Length of coverage needed
Ultimately, it depends on the number of working years you have left and what you'd like to accomplish. Debt left to loved ones, future goals you'd like to see continue—it's all part of the equation to determine the right amount of coverage you need.
To choose the right policy length, start by estimating how much death benefit your loved ones would need to replace your income if you passed away. “First, understand how much coverage is necessary to protect your family,” says Schwingler. “Then, select a term length that aligns with both your life stage and budget.”
Common term lengths
Common term lengths include:
- 10-year term: Ideal for short-term financial obligations or budget-conscious buyers.
- 15-year term: A practical choice during transitional life stages, such as career changes or planning for college expenses.
- 20-year term: Popular among those raising children, paying off a mortgage or funding college education.
- 30-year term: Best suited for covering long-term commitments, like raising a family or protecting business interests.
How much does term life insurance cost?
Term life insurance is generally the most cost-effective way to get substantial life insurance coverage. Premiums are based on several factors:
- Age: Younger applicants typically pay less.
- Health: Medical history, lifestyle and tobacco use affect rates.
- Term length: Longer terms usually cost more.
- Coverage amount: Higher death benefits come with higher premiums.
For example, a healthy 30-year-old male could pay as little as $45/month for a 20-year, $500,000 policy.
Who should consider term life insurance?
Term insurance is especially useful when your financial responsibilities are high and your budget is tight.
You might consider term life insurance if:
- You’re raising a family: Term life can help replace your income and cover expenses like childcare, education and daily living costs if something happens to you.
- You have a mortgage or large debt: A term policy can help ensure your family isn’t left with unpaid loans or housing insecurity.
- You’re starting or growing a business:
Term life can protect your business partners or provide funds to keep operations running. - You’re early in your career: It’s a cost-effective way to lock in coverage while you’re young and healthy.
- You want flexibility: Many term policies offer the option to convert to permanent coverage later without new underwriting.
Pros and cons of term life insurance
When considering term life insurance, weigh the pros and cons against your current situation.
| Pros | Cons |
| Affordable premiums | No cash value |
| Simple to understand | Expires after term ends |
| High coverage for low cost | May not meet long-term needs |
| Convertible options | Premiums increase if renewed |
How term insurance differs from permanent life insurance
Unlike permanent life insurance—which lasts your entire life and includes a cash value component—term life insurance is temporary and does not accumulate any
Term life insurance vs. other types of life insurance
Choosing between term and permanent life insurance depends on your goals, budget and how long you need coverage.
- Term life is ideal for temporary needs and affordability.
- Whole life offers lifelong coverage and builds cash value.
Universal life and variable universal life provide flexibility in premiums and death benefits.
Dive deeper into comparing term to permanent life insurance options
Types of term life insurance riders
Riders are optional add-ons that can enhance your policy’s flexibility and protection.
Common riders:
Accelerated Death Benefit Rider : Allows you to access a portion of your death benefit if diagnosed with a terminal illness.Disability Waiver of Premium Rider : Waives your premiums if you become disabled and can’t work.Conversion Rider : Lets you convert your term policy to permanent coverage without a medical exam.
These riders can provide added financial security during life’s unexpected turns.
How to get term life insurance
Getting term life insurance is a straightforward process, and you don’t have to do it alone.
5 steps to get covered
- Get a quote:
Use our quote tool - Work with a financial advisor:
Connect with someone local - Complete a medical exam (if required):
How the application process works - Underwriting review:
How underwriting works - Get approved and start your coverage
FAQs on term life insurance
What happens at the end of term life insurance?
Learn more:
Can I convert term to permanent insurance?
Learn more:
Can you have both term and permanent life insurance?
- Choose a blended (hybrid) policy: A single policy that mixes affordable term coverage for immediate needs with permanent coverage that builds cash value over time.
- Own separate policies: Use a term policy for short-term needs like paying a mortgage or raising kids, and a permanent policy for lifelong protection, cash accumulation or legacy goals.