The short answer
This guide answers the most common questions about group vs individual term life.
The term is the part of a life policy people think about least, yet it matters as much as the amount. Too short, and coverage ends while your family still needs it. Too long, and you pay for years you may not need.
Here is how to choose between 20 and 30 year term life insurance.
Part of our complete guide: Term Life Insurance: The Complete Guide.
Quick answer
Pick the term that covers your longest important need. Longer terms cost more per year but lock in today's age. Two policies with different terms can cost less than one.
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Group vs individual term life: what is term life insurance?
Term life insurance covers you for a set number of years, such as 10, 20 or 30. If you pass away during the term, the policy pays a death benefit to your beneficiaries. If you outlive the term, the coverage ends and nothing is paid.
Because it does not build cash value, term is usually the most affordable way to buy a large amount of coverage. It fits needs that have an end date: a mortgage, raising children or replacing income until retirement.
Can you change term into whole life?
Most term policies can be converted to a permanent policy for some or all of the amount, without a medical exam, within a set window. This protects you if your health changes.
- Check when the conversion window closes, often at a certain age or policy year.
- Check which permanent products are available for conversion.
- Expect a higher premium for permanent coverage, based on your age at conversion.
Compare rates from several carriers in about two minutes. Free, no obligation.
Can you turn term into permanent coverage?
A conversion privilege is one of the most valuable features a term policy can have. It lets you trade term coverage for permanent coverage later, with no new health questions, within a set window.
- Cutoff. Conversion is usually allowed until a certain age or policy year. Know the date.
- Partial conversion. Many policies let you convert part of the amount and keep the rest as term.
- Cost. Permanent coverage costs more, and the rate uses your age at conversion.
Should you convert now or later?
- Your health has changed and new coverage would be hard to get or expensive.
- The conversion cutoff is near and you still need coverage for life.
- Your needs have become permanent, such as a dependent who will need support for life or estate planning goals.
- The term is ending and renewal rates would climb every year.
You don't have to convert everything. Converting part of the amount keeps permanent coverage affordable while the rest runs out with the term.
How to compare the options fairly
- Compare the same coverage amount and term length.
- Check what happens at the end of the term: renewal, conversion or nothing.
- Look at the carrier's financial strength rating.
- Ask about riders included at no cost versus ones that add to the price.
How to get covered in 3 steps
- Check your rate. Pick your state and answer a few quick questions about the coverage you want.
- Compare carriers. A licensed agent compares term life insurance options from several insurers and explains the trade-offs.
- Apply and get covered. Many applications take one phone call. Coverage starts once the policy is issued and the first premium is paid.
A worked example
Say you're 34 with a $150,000 mortgage balance and 16 years left, $19,000 in other debts, and an income of $55,000. Here's one simple way to size coverage:
| Item | Amount |
|---|---|
| Mortgage balance | $150,000 |
| Other debts | $19,000 |
| 4 years of income | $220,000 |
| Total to consider | $389,000 |
In this example, a 20-year term would outlast the loan (it ends around age 54). Your own numbers will differ; use this as a starting point and adjust for savings, other coverage and future costs like school.
Who term life insurance is for
Often a good fit
- Parents with children at home. Homeowners with a mortgage. Anyone whose income supports others. People who want a lot of coverage at a lower price.
Maybe not the right fit
- People who need coverage for life, such as for final costs or estate planning. People who want cash value they can use later. In those cases, permanent coverage may fit better.
