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What is term life insurance?
Term life insurance is the most affordable way to protect your family’s financial security if something were to happen to you. As the name suggests, you have the option to choose your term length and only buy it for as long as you need it. The lengths typically available are 10, 15, 20, 25 and 30 years.
Understanding the Basics of Term Life Insurance
Due to its simplicity and affordability, term life insurance is one of the most popular ways to create a financial safety net for you and your family. When considering term life insurance, it’s important to have your health, age and the amount of coverage your loved ones would need in mind. The final of those three can often be the most complex, but some expenses to consider would be a mortgage, future college costs, supporting dependents, end-of-life expenses and any additional financial cushion that might be beneficial to your family.
At SelectQuote, we work with some of the most trusted life insurance companies and can give you unbiased coverage options and price comparisons in just minutes. Even if term life insurance is one of the most straightforward types of life insurance, you’ll still want to be informed about all of the options available to you.
Types of Term Life Insurance
The different types of term life insurance—also known as term lengths—typically include 10, 15, 20, 25 or 30 years. Deciding what term length is right for you and your family can be tricky, but it’s made easier by working with SelectQuote and considering the following questions:
- How much life insurance can you afford?
- Who depends on your financial support?
- What are your family’s immediate and future financial needs?
Cost of Term Life Insurance
The cost of term life insurance is determined by several factors, including the length of term, amount of coverage, and your age, gender, health and lifestyle at time of purchase.
Because you only pay it for as long as you need it, though, term life insurance is considerably more affordable than whole or permanent life insurance. Many term life insurance policies feature “guaranteed level” premiums, meaning you pay the same premium for the length of your policy, and oftentimes, they’ll offer an additional discount if you choose to pay the premium on an annual basis instead of monthly.
Benefits of Term Life Insurance
There are a number of benefits that come with purchasing a term life insurance policy, but a few include:
- Flexible payment options
- Pre-existing condition-friendly
- Fixed premiums
How Much Term Life Insurance You Need
The amount of life insurance needed varies for everyone, but many people aim for 10-12 times their income. You should not only take into account how much life insurance you can afford, but also who is dependent upon your financial support and what that looks like in both the immediate future and down the road. You can use our insurance calculator to get a better idea of how much insurance might be right for your situation. Then, we can help you figure out the amount of coverage you need at a price that fits your budget.
Frequently Asked Questions (FAQs) about Term Life Insurance
What happens if term life insurance expires?
It’s important to first understand that the insurance doesn’t necessarily go away, but instead, the rate at which you were paying does. After the term period ends, you can usually continue your policy on a year-to-year basis but at a much higher premium. Before that happens, though, SelectQuote is able to help you shop around for a new policy to ensure you’re still receiving the coverage you need at a price that fits your budget.
What is the death benefit?
If you pass away while your life insurance policy is still active, your beneficiaries will receive a tax-free lump sum called the death benefit, which can be paid out all at once or over the course of their lifetime.
Is there no medical exam term life insurance available?
Yes, there is no medical exam term life insurance available through an accelerated underwriting process. This process should not change the cost of monthly premiums, but it might lower the amount of coverage available.
What does term life insurance cover?
Term life insurance typically covers the cost of end-of-life expenses in addition to outstanding expenses your family might still be expected to pay once you’re gone, including the mortgage, utilities, college tuition, outstanding debts, etc.
Why buy term life insurance?
Term life insurance can provide peace of mind for both you and your family if the unexpected happens, ensuring they will be supported financially if there is a significant loss of income.