Jeff is a well-known speaker and expert in life insurance and financial planning. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading finance websites. He is a licensed life insurance agent and has helped over 3000 people secure life insurance. He is licensed in all 50 states & DC. Jeff has spoken at top insurance conferen...

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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: Oct 14, 2020

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A term life insurance policy is one of the most basic and straightforward kinds of life insurance policies available. So take the next step and apply for term life insurance now! Enter some basic information in the rate quote calculator on the right and see how much you can save on a term life insurance policy package today.

To help you get started on the road to applying for term life insurance, let’s get down to basics and break down exactly what a term life insurance policy is and what it can do for you.

Term Life Insurance Basics

  • This policy is the most basic and standard forms of life insurance. It is a policy with coverage that lasts for a predetermined period of time. This term of coverage is decided by the insured and the insurance agent. A term of coverage can last 1 year, 5 years or 20 years. The term is dependent upon the needs of the insured. Whereas a whole life insurance plan provides coverage for the lifetime of the insured, term life provides coverage during the predetermined term of coverage.
  • A premium, which is a recurring policy payment for the enactment and life of the policy coverage, is a predetermined amount of money that must be paid in full and on time by the insured on a predetermined schedule. Paying the premium on time and in full is what keeps the policy active.
  • If the owner of the policy, known as the insured, dies within the predetermined time frame of policy coverage, also known as the term of coverage, then a death benefit is paid out to beneficiaries.
  • However, death benefits are only paid out to beneficiaries if the insured dies within the predetermined time frame of policy coverage. For example, if you take out a 5-year term life insurance coverage plan, then you are only covered for a term of 5 years. If the insured policyholder dies 5 years and 1 day after buying a 5-year coverage plan, then death benefits will be not paid out because the insured died outside the window of coverage.
  • Predetermined policy coverage time frames and limited terms of coverage is one of the reasons why this type of coverage is so affordable. For example, whole life insurance, also known as permanent life insurance, features policy coverage that lasts the lifetime of the person insuring the policy. Term life is active for a predetermined period of time.
  • The insured, the owner of the policy, does not get back any of the premium paid out over the term coverage of a policy if the insured does not pass away within the predetermined term coverage time frame. In other words, even if the insured does not pass away within the time frame of term coverage and lives for many years after the lapse of the policy, they will never be legally entitled to a refund or reimbursement of premium in any way.
  • The business of insuring people against the statistical odds of physically expiring within the time frame of a term of policy coverage is fraught with financial risk for an insurance company. Insurance fraud is also another burgeoning crisis for the industry. For these reasons and more, you may be asked to provide additional personal information or submit to a medical examination conducted by a licensed physician. But such policy conditions are more determined by the needs of each policy.
  • “Underwriting,” is the formal description of the assessment and application process associated with life insurance policy coverage application considerations, approvals and denials.

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Annually Renewable Term Life Insurance Options and Basics

The predetermined time frame of term coverage for a term life insurance plan can be for one year or 10 years. The maximum time frame of coverage for most basic forms of term life insurance is usually 20 or 30 years.

Term life insurance policies usually offer an annually renewable option of the policy. This option is popular with people who only want to deal with the bare minimum of coverage.

  • Applicants of the renewable term life insurance option must submit to a doctor’s medical evaluation to qualify for the first year of coverage. But, barring any medical or personal life setbacks, the doctor’s medical evaluation is a one-time policy mandate.
  • After the first year, the policy owner can automatically renew the coverage every subsequent thereafter without the need for medical evaluation.
  • The annually renewable term life insurance option is enforceable as long as premiums are paid in full and on time.
  • The premium for this renewable option feature will increase incrementally for every subsequent year of renewed coverage.
  • The premiums are annually increased with this option because with advancing age comes the advancing risk of injury, disease and health deterioration. Younger applicants of such coverage will always pay far cheaper premiums than compared to senior citizen applicants.

Level Premium Term Life Insurance

Term life insurance can be purchased for one year or renewed on an annual basis, or even a combination. Coverage can also be bought in predetermined time frame lengths of coverage without increasing premium rates. This kind of coverage is known as level premium term life insurance.

Level premium term life insurance features fixed premium rates that will never increase during the duration of predetermined terms of coverage. A 5-year or 20-year term life insurance policy will feature fixed premiums for the duration of the coverage.

But in addition to being affordable, term life insurance policies come standard with multiple, adjustable and adaptable policy options to serve the unique circumstances and needs of each individual applicant.

Whether you need $200,000 or over $2,000,000, you have options.

Let’s take a look at the basic terms of a few different kinds of such policy options.

Group Term Life Insurance Features

The group term life insurance policy option is a very basic and automatic form of term life insurance. It is so easy to get that all you really have to do to get apply for it in most cases is become employed.

  • Group term life insurance is usually offered to the employees of companies that apply for it.
  • This type of term life insurance is available to the employee for only as long as the employee is employed by the employer company offering it.
  • The premium for most kinds of group life insurance is very low or can be completely free, depending on the job package. If there is a premium, then it is usually deducted from employee wages.
  • Group term life insurance policies offers more options for people who lose or change jobs. Options are made available to continue current coverage through conversion to independent coverage or transitioning to other affordable forms of coverage.
  • Group term life insurance provides a death benefit of predetermined sum to the beneficiaries of the employees that sign up for it.
  • This group policy option version of term life insurance is offered to companies, businesses and employers of 10 or more employees to diminish the financial and legal risk that employers expose themselves to if an employee is injured, sickened or killed in the workplace.
  • It is a good idea to stay extremely updated and apprised of current beneficiary listings, as coverage is easily lost, changed or adapted through job loss or change.

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Decreasing Term Life Insurance

  • This form of term life insurance is usually considered to be a supplemental or add-on policy.
  • It was formerly popular with homeowners who wanted to add another layer of insurance protection for their families.
  • Decreasing term life insurance is also known as the mortgage life insurance since it usually has term coverage periods of 20 to 30 years.
  • Decreasing term life insurance guarantees a death benefit payout, but each successive annual or monthly payout decreases in amount by a predetermined rate.
  • The guiding theory behind the need for decreasing term life insurance is that the urgency for adequate life insurance coverage decreases and/or becomes unnecessary as certain levels of policy owner risk becomes more and more unlikely. People who own, maintain and pass on property are less likely to engage in risks and behaviors to negate the value and worth of such property, is the reasoning.
  • The reasoning for such policies are molded to the needs of the policy. You can find many policies that have options founded on the belief that with advancing age comes increasing advancing risk. It all depends on finding the policy that suits your lifestyle and personal needs.
  • Not the most popular of available term life insurance options and is usually offered as supplemental options to property owners, homeowner and multiple policy owners.
  • Not very suitable as a starter insurance for someone who has never been insured before. Assess your insurance needs and options and shop around.

Convertible Term Life Insurance Adjustment Options

This is the coverage option to convert your current term life insurance policy into another kind of policy option. Term life insurance offers terms of coverage for a predetermined period of term coverage, from one year to multiple years. If the original policy features a convertible or policy conversion option then the original predetermined period of term coverage can be converted at a later time to a whole, universal or permanent form of coverage.

This means that the policyholder is covered until their death and not just for a predetermined period of time. Policy conversion options come with the risk of extra fees, conditions as well as requests for more information or having to take a medical examination. But the convenience of conversion may be worth it if personal circumstances change.

How to Proceed Next

After checking out your rate options on our website’s rate calculator, contact us soon as possible so that we can match you with a term life insurance professional who can help you with all your insurance needs.

It is never too early and it is never too late to apply for life insurance. Allow us to help you apply for term life insurance today!