Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent Benji Carr

UPDATED: Feb 8, 2022

Advertiser Disclosure

It’s all about you. We want to help you make the right life insurance coverage choices.

Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance provider and cannot guarantee quotes from any single provider.

Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from top life insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.

The Facts of Life

  • Term life insurance policies are more expensive as you get older
  • Term life insurance has term lengths of five-year, 10-year, 20-year, and 30-year policies
  • You can expand term life insurance with life insurance riders

Are you concerned about the disadvantages of term life insurance? If term life insurance sounds too good to be true, you should probably investigate insurance advantages and disadvantages together.

What is term life insurance? And what does term life insurance mean for you? Don’t worry, we’re here to help.

Our guide explains the disadvantages of term life insurance, the difference between term and whole life insurance, and which companies are best for term life insurance.

Read on to learn all about the disadvantages of term life insurance and where you can buy a policy. Use our free online tool above to compare the best insurance companies in your area.

What are the disadvantages of term life insurance?

Term life insurance is known for its cheap monthly rates, but term life insurance has several disadvantages. But what are they?

Let’s look at the drawbacks of term life insurance.

  • Increasing life insurance rates: Term life insurance is known for its increasing monthly rates and constant medical checks as you get older.
  • No savings account: One of the most significant disadvantages of term life insurance is it doesn’t carry an accumulated cash account.
  • A small percentage of death claims are made: Most people outlive their term life insurance policies, which means a small number of term life insurance claims are made.
  • Term life insurance availability is more challenging for seniors: Policyholders who are 65 and older may have a difficult time securing term life insurance.

Besides affordability, term life insurance doesn’t have perks outside of life insurance coverage. However, you can add life insurance riders to expand coverage.

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What are the advantages of term life insurance?

One of the greatest advantages of term life insurance is the affordable monthly rates. Younger people (between 20 and 49) have cheaper term life insurance rates.

Life insurance companies know that the life expectancy of younger people is much higher than seniors, and younger people have a high probability of being more healthy. Therefore, term life insurance is usually cheaper for younger age groups.

Term life insurance also offers some flexibility. You can cancel your policy any time you need to, and some companies even allow you to convert your term life insurance policy into permanent life insurance.

What are life insurance riders?

Life insurance riders are add-ons that provide life insurance coverage for areas that aren’t usually covered by a life insurance policy. Since term life insurance only covers you, most life insurance companies use riders to extend coverage.

For example, a child rider can provide life insurance if a child passes away suddenly. Another rider is a return-of-premium rider, which provides a refund of all the payments you’ve made during your term life insurance policy.

One of the most popular riders is the accidental death and dismemberment (AD&D) rider. This provides coverage if you pass away from an accident or you’ve been disabled due to an accident.

An AD&D rider also gives you death benefits (policy amount) if you’ve been disabled due to an accident (work-related accident, car accident, etc.).

How much are term life insurance vs. whole life insurance rates?

We’ve talked about how term life insurance is cheaper than permanent life insurance, but we haven’t shown you exactly how much cheaper it is. Let’s look at term life insurance rates and compare them to whole life insurance rates.

Average Monthly Term vs. Whole Life Insurance Rates
Policyholder Age & Tobacco UseAverage Monthly Term Rates: MaleAverage Monthly Term Rates: FemaleAverage Monthly Whole Rates: MaleAverage Monthly Whole Rates: Female
25-Year-Old Non-Smoker$15$13$94$85
35-Year-Old Non-Smoker$15$14$128$113
45-Year-Old Non-Smoker$22$20$191$243
55-Year-Old Non-Smoker$44$34$295$422
65-Year-Old Non-Smoker$106$73$528$204
Average Annual Rates for Non-Smokers$40$186$247$204
25-Year-Old Smoker$27$21$116$107
35-Year-Old Smoker$30$24$157$146
45-Year-Old Smoker$53$41$224$206
55-Year-Old Smoker$114$83$350$321
65-Year-Old Smoker$270$186$600$204
Average Annual Rates for Smokers$99$71$289$253
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Overall, term life insurance is cheapest for young, non-smoking people. People who smoke pay significantly more for life insurance. Meanwhile, senior life insurance is the most expensive for seniors with a smoking habit.

But these are only term life insurance estimates. Term life insurance rates change when you shop with multiple companies.

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What’s the difference between term and whole life insurance?

Term life insurance is like renting life insurance coverage just in case you suddenly pass away. It only lasts for a few years and provides basic life insurance services.

But whole life insurance lasts your entire life in addition to providing a savings account that builds interest and accumulates cash over time. Whole life insurance offers more financial flexibility along with riders you can use.

What are the best companies for term life insurance?

If you’re not sure where to shop for term life insurance, you should start with the best life insurance companies in the United States. Let’s examine the top life insurance companies in America and see which company has the cheapest rates.

Average Term Life Insurance Rates and A.M. Best Ratings by Company
CompanyAverage Monthly Term Life Insurance RatesA.M. Best Rating
Allstate$15A+
Banner Life$9A+
Guardian Life$10A++
Haven Life$11A++
John Hancock$11A+
MassMutual$10A++
MetLife$9A+
Mutual of Omaha$12A+
Nationwide$13A+
New York Life$11A++
Northwestern MutualN/AA++
Pacific LifeN/AA+
PrimericaN/AA+
Principal$9A+
Protective$9A+
Prudential$16A+
State Farm$15A++
USAA$12A++
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You can find term life insurance rates for as low as $9 a month. Banner Life, MetLife, Principal, and Protective are the cheapest companies in the nation. But the most expensive insurance companies are Allstate and Prudential.

What happens to my term life insurance policy when it’s over?

Before your term life insurance policy ends, you’ll have an option to renew your life insurance policy with another term, or you can convert it to a permanent life insurance policy. Or you can let your term life insurance policy expire.

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Disadvantages of Term Life Insurance: The Bottom Line

Term life insurance has multiple disadvantages, but the benefits balance out the negative parts of term life insurance policies. Take advantage of cheap term life insurance rates while you’re young.

As you get older, life insurance becomes more expensive. And life insurance companies recognize that as people age, their life expectancy decreases. This is one of the main reasons why life insurance rates increase.

If you’re concerned about life insurance coverage, add life insurance riders to your policy. Expand your life insurance coverage with a permanent life insurance policy if you want more perks.

Now that you know more about the disadvantages of term life insurance, enter your ZIP code in the free comparison tool below to compare multiple insurance companies near you.