Term Life Insurance: The basics

what is term life insurance?

Term life insurance is as basic as it gets in the life insurance industry.

It pays out to your beneficiaries for a covered reason during the set term, which can easily be renewed once your term is up.

However, your premiums can get pretty costly at that time.

Term life insurance only pays out death benefits, and is not a way of saving money like some policies.

Who should get insurance?

Anyone who is a primary breadwinner or contributes significantly to their family’s income should get term life insurance, even if you are young and healthy.

Accidents can happen and life insurance can give your family a breather and the ability to pay the mortgage or rent while they reestablish their finances. It also covers the sometimes substantial costs of burial or cremation.

Your policy can have more than one beneficiary; ergo, your beneficiaries can include your spouse, children, even your parents. If you name a child as beneficiary there will need to be a trust set up.

Term life insurance is also good if you only need short-term coverage. Single year renewable policies are often the cheapest option.

The process of getting insured.

calculate your coverage

Get started by calculating how much you need in coverage.

You’ll be provided with 3 options to choose from.

Choose your carrier

Once you chosen the coverage, answer a few more questions to get instant and accurate quotes from many of the top insurance carriers.

chat with an agent

Now that you’ve found the carrier and applied online, you’ll schedule a quick phone call with one of our agents to verify you answer any questions.

go through underwriting

This is where an underwriter will determine your coverage.

Once this is complete, we’ll be notifying you of the results.

accept your new policy

All our carriers accept electronic signature to allow you to instantly accept of your policy. 

Congrats, you’re insured!

How are premiums determined?

How much you pay for term life insurance is based on a number of factors. The primary factors are your age, gender, and overall health.

They might also take into account your occupation, family medical history, whether you smoke, your driving record, and whether you engage in sports or risky hobbies.

your age

Age is one of the clear cut factors in determining your premium.  The older you are, the higher the premium.

That’s why it’s important to lock in the premiums at an early age.

your gender

Unfortunately, this matters.

Statistically, women live longer than men, so their premiums tend to be lower.

Men and women also have different health risks that go into consideration.

your health

And of course, your health is at the top of the list in factoring your premium.

Cholesterol, diabetes, high-blodd pressure, and many more are part of the underwriting process to determine what your premium ends up being.

How Long does Term Life Last?

How long the policy lasts depends on the type of policy.  Most term policies last for a specified period, which ranges from 5 to 40 years with no change to either the death benefit or the premium.

When you renew your term life insurance after the maturity year, premiums will be recalculated and can increase substantially year after year.

"The younger and healthier you are, the lower the premium.  Consider choosing a longer term period to lock in your rates while you're young."
Matt Ruttenberg

Term life insurance is an attractive option for many young people, but you should do the math and work out term period is best for you. 

Permanent policies such as Whole Life or Universal Life has its advantages in certain situations and don’t have a maturity date, but can be prohibitively expensive when you are starting a family and early in your career. 

Many policies have the opportunity to convert the term policy into a permanent option.

If you aren’t sure which option is best for you, reach out to one of our experts.

Term vs. Permanent Insurance

Term Life

Term life is simply.

There is no cash value.  However, premiums are much lower and typically average between $20-30 for a healthy adult.  Term Life Insurance is normally a better choice for young families who are still growing their wealth and save for retirement.

Permanent life

Permanent insurance, like Whole Life and Universal Life, include a savings component and requires a much higher premium. 

The higher premium is to pay for the higher price of the insurance, but also to help build a cash value inside the policy to help offset the cost of insurance or use for other goals.

Permanent policies can cost on average of 10x more than term life.

Some people use this as a vehicle to save for their kids’ college expenses or retirement supplement.