Term Life Insurance

Term life insurance is perhaps the easiest and most straightforward type of life insurance. The coverage and terms are flexible, the cost is affordable, and the medical examination is optional.
Author: Ben Peetermans
Last updated: June 24, 2021

What is term life insurance?

Put simply, term life insurance is a temporary agreement between you, the insured, and the insurance provider. We say temporary, since term life insurance is not a permanent solution, like whole life insurance.

Instead, you choose a predefined term, such as 10, 20, or 30 years. If you pass away during this term, the insurance provider will pay your beneficiaries the death benefit.

On the other hand, if you outlive the term, the policy will come to an end, and the insurance provider will not make any payments to you or your beneficiaries. That is unless you want to pay extra for a return of premium policy.

It is for this reason that term life insurance is mainly used as a precaution against the unexpected. And it also for this reason why term life insurance is so affordable.

How does term life insurance work?

Term life insurance is pretty simple. You choose how much coverage you want, and how long you want the coverage for (known as the term). If the insured passes away during the chosen term, the beneficiaries will receive the death benefit.

During the term, the cost (known as the premium) will never increase and the term will never decrease.

Furthermore, the policy will never be canceled, even if your health changes or you develop serious health conditions. The only time the insurer will cancel your policy is if you miss payments.

Choosing coverage

Coverage wise, a simple calculation is to multiply your annual income times 15. For example, if you make $50,000 a year, $750,000 of coverage is a good rule of thumb.

But, you shouldn’t have to struggle to make life insurance policy payments. We firmly believe that a $50,000 policy you can easily afford is better than a $750,000 policy that may lapse because you missed payments. So, be sure to compare rates for multiple coverage amounts. Make sure you can afford the policy you get.

Choosing the policy term

The policy term is the duration of how long the contract between you and the insurer will last. Most insurance companies offer 5, 10, 15, 20, 25, and 30-year policies. Some even offer 40-year policies.

The maximum term period that will be available to you depends on your age. Most likely, you won’t be able to get coverage beyond age 90 with a term policy.

Keep in mind that you can always cancel your term life insurance policy if you no longer need it.

We believe that it’s better to opt for a 20-year term to be on the safe side. While it costs slightly more than a 10-year term policy, you will save a lot of money compared to getting a 10-year term, and then getting another 10-year term policy once the first policy ends.

Medical examination

Medically underwritten term life insurance policies offer the best price. But as the name indicates, they require a medical exam.

The medical exam is scheduled with a licensed physician near you. If you are unable to visit a physician, it can be arranged for the physician to meet you at your home or office.

This also shows that the medical exam isn’t as bad as you may think. The physician will take your vitals, such as blood pressure and oxygen levels. They will also draw blood for a more in-depth review.

If you are afraid of needles or don’t want to undergo the medical examination for other reasons, you can opt for a no medical exam term life insurance policy instead.

Don’t miss payments

We previously mentioned it’s better to go with a $50,000 policy that you can afford, than a $750,000 you struggle to pay. While some insurers may be more forgiving than others, if you miss payments, the insurer will cancel the policy.

How much does term life insurance cost?

Probably less than you think. Term life insurance is one of the most affordable types of life insurance available. In fact, according to our recent study, around 50% of people overestimate the cost of term life insurance.

Other types of life insurance can cost 5 to 10 times more than term life insurance. So if you’re looking for the most affordable life insurance, term life insurance is for you.

We’ll talk about why term life insurance is so affordable next, but first, here are some sample prices.

Average term life insurance rates by age

These rates are calculated for a 20-year term policy.

Age & Gender$50,000$250,000$500,000$1,000,000
25 – Male$8.61$12.35$19.11$31.16
25 – Female$7.83$10.89$15.72$23.47
35 – Male$9.48$13.38$21.28$35.06
35 – Female$8.66$12.12$17.87$29.91
45 – Male$15.27$26.31$46.27$88.85
45 – Female$12.83$21.22$37.20$69.10
55 – Male$31.97$64.81$119.13$227.85
55 – Female$24.71$48.87$88.73$166.17
65 – Male$81.61$201.35$387.35$748.10
65 – Female$63.12$142.47$264.22$508.99

The prices above are sample prices calculated for non-smokers based in Arizona in excellent health. Get a quote to calculate your price.

Why term life insurance is so inexpensive

Term life insurance is one of the most affordable types of life insurance. In fact, term life can cost 5 to 10 times less than whole life insurance.

There are a few reasons why term life insurance is so affordable:

  • The average life expectancy is increasing.
  • When shopping through an online brokerage like True Blue Life Insurance, you can compare prices from multiple carriers. This leads to carriers offering competitive pricing to gain your business.
  • A certain percentage of people will miss payments, which leads to the policy getting canceled.
  • There are few administrative costs to underwrite and manage term policies.
  • If you live past the term, the insurance company avoids paying the death benefit.

It’s no surprise that as you get older, it costs more to buy a new life insurance policy. That’s true for any kind of life insurance.

Plus, as you get older, your chances of developing one or more health conditions go up — and that could also increase the rate you would pay for coverage. In short, the longer you wait, the fewer choices you’ll have for purchasing affordable life insurance.

But, if you buy a term life insurance policy while you’re younger and your health is good, you can lock in a lower price and minimize your cost for coverage as the years go by.

If you already have a significant health condition (or more than one), such as diabetes or even cancer, know that not all companies will rate you the same way. Working with an independent agent can help make the shopping and application process easier and your coverage more affordable.

True Blue agents are thoroughly familiar with the underwriting rules at the dozens of insurance companies we work with, and they know which companies are more lenient when it comes to different health issues. This makes it possible for us to help you keep the cost of term life insurance as low as possible.

Can the premiums change?

It depends on the type of term life insurance. A guaranteed level term life insurance is our recommended, and the most popular type, of term life insurance. With this type of term insurance, the premium will stay the same, guaranteed.