The short answer
This guide answers the most common questions about term life insurance companies.
20 vs 30 year term life insurance is a common choice, and both can be right. The best term lasts as long as the need it protects: the mortgage, raising children, or income until retirement.
This guide compares common term lengths and explains when two shorter policies make more sense than one long one.
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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10 vs 20 year term life insurance: how term life insurance works
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.
What happens when term life expires?
When the term ends, the coverage stops. You will not get your premiums back unless you bought a return of premium policy. Most policies give you options before then.
- Convert to permanent coverage, if the policy allows.
- Renew year to year, usually at a much higher price that rises each year.
- Buy a new policy, if your health and needs justify it.
- Let it end, if the need is gone.
Compare rates from several carriers in about two minutes. Free, no obligation.
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.
Can you turn term into permanent coverage?
Many term policies include a conversion option. It lets you change some or all of your term coverage into a permanent policy without new medical underwriting, as long as you do it within the window the policy allows.
That matters if your health changes. Even if you could not qualify for new coverage, conversion can keep you insured. The new permanent policy usually costs more because it lasts for life, and the price is based on your age when you convert.
Check three things in any term policy: whether it is convertible, until what age or policy year, and which permanent products you can convert into.
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.
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.
Why work with an independent agency
A captive agent works for one insurance company and can only offer its policies. An independent agent is appointed with several carriers and can compare them side by side.
That matters because carriers price the same person differently. One may be friendlier to a past health condition, another to tobacco users, another to larger coverage amounts. Comparing several gives you a better chance at a fair price.
You do not pay extra to use an independent agent. Agents are paid by the carrier you choose, and the premium is the same as buying from that carrier directly.
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.
