Term life insurance is the simplest kind of coverage. You choose an amount and a length of time, typically 10, 20 or 30 years. You pay a level premium, one that stays the same, for that term. If you pass away while the policy is in force (active), your beneficiaries receive the death benefit. When the term ends, the coverage ends unless you renew or convert it.
For most families I work with, term life is the workhorse. It lines up with the years of your biggest obligations: the mortgage, the kids at home, the years before retirement accounts are built up. It doesn't build cash value (an amount in permanent policies that can grow), so it costs considerably less than permanent coverage for the same death benefit.
As an independent agent, I quote term life from a dozen-plus carriers, and the differences are real. Two companies can price the same healthy 38-year-old very differently. Only some of them include living benefits on their term policies at no added cost.
Important to know about term life insurance
- Living benefits are provided through accelerated death benefit riders that vary by carrier and may not be available on every policy.
- Benefits paid reduce the death benefit, may be reduced by a discount or fee, and may be paid as a lump sum or in installments. They may be taxable and may affect eligibility for Medicaid, Supplemental Security Income or other public assistance programs.
- This is a general description; the policy controls.