Term Life Insurance
Affordable coverage for 10, 20, or 30 years — with return-of-premium and conversion options.
What is term life insurance?
Term life insurance is pure protection for a set period — typically 10, 20, or 30 years. You pay a level premium; if you die during the term, your beneficiaries receive the death benefit income-tax-free. If you outlive the term, coverage ends. No cash value, no investment component — which is exactly why it costs a fraction of permanent coverage for the same death benefit.
How does term life insurance work?
You apply, go through underwriting based on age and health, and lock a level premium for the full term. The carrier pools premiums against actuarial mortality risk — that math is why a healthy 35-year-old pays so little for substantial coverage. If a covered death occurs during the term, the beneficiary files a claim and receives the full death benefit. Premiums never rise mid-term on a level-term policy.
What does the "term" mean, and how long should mine be?
The term is the coverage window — commonly 10, 15, 20, 25, or 30 years. Match it to the obligation you are protecting: a 30-year mortgage suggests a 30-year term; kids who are independent in 15 years suggest 15 to 20. The wrong answer is a term that expires while the people depending on your income still depend on it.
What happens when the term ends?
Three paths. Let it lapse if the need is gone. Renew annually at sharply higher age-based rates — rarely the good option. Or convert to permanent coverage, which most quality term policies allow without a new medical exam up to a conversion deadline. That conversion privilege is the most underused feature in term insurance: it locks your insurability even if your health has changed.
Term vs whole life — how do I choose?
Different jobs. Term buys the most death benefit per dollar for a defined window — income replacement, mortgage protection, young families. Whole life and other permanent coverage cost more but never expire and build cash value. Many families rationally hold both: term for the big temporary need, permanent for the lifelong layer. The mistake is buying either one because a blanket rule said so.
Do term life policies have cash value? Can you borrow from them?
No — term is pure protection by design, and that absence of cash value is why it costs 60 to 90 percent less than permanent coverage. There is nothing to borrow against. If you want coverage that builds accessible, tax-advantaged value during your lifetime, that is what cash-value designs like indexed universal life are built for.
Do I get my money back if I outlive my term policy?
With standard term, no — premiums bought protection, the same way car insurance premiums do. The exception is a return-of-premium (ROP) rider, which refunds your premiums if you outlive the term in exchange for a meaningfully higher payment. Whether ROP is worth it depends on what the premium difference could earn elsewhere — we will run that math with you rather than hand-wave it.
How much does term life insurance cost — say, $500,000 or $1 million?
Less than most people guess, but the honest answer is that price depends on age, health class, tobacco status, term length, and carrier underwriting. A healthy non-smoker in their 30s often covers $500,000 for roughly what a streaming bundle costs monthly; $1 million scales close to linearly. Anyone quoting exact numbers without underwriting you is guessing — we quote from real carrier illustrations.
How much term life insurance do I need?
Start with the obligations that outlive you: 10 to 12 times income if a family depends on it, plus the mortgage balance, plus college costs, minus what is already covered. A $75,000 income with a $250,000 mortgage and two kids usually pencils out near $1 million or more — which is why underinsurance, not overinsurance, is the common failure.
Do term life policies actually pay out?
Yes — carriers pay the overwhelming majority of legitimate claims. The statistic that most term policies "never pay out" is true but misleading: it means most policyholders outlive the term or let coverage lapse, not that claims get denied. The real payout risks are misstatements on the application and lapses from missed premiums — both preventable, and both things an honest agent protects you from at application time.
What does Dave Ramsey say about term life insurance — is he right?
He recommends buy term and invest the difference, and for a young family on a budget protecting income, we often agree — term is the right first move. The blanket version of the advice breaks down at the edges: high earners who have capped tax-advantaged accounts, estate liquidity needs, business succession, and anyone whose health may make later coverage unaffordable. Rules of thumb are where planning starts, not where it ends.