Term Life Insurance 101

term-life-insuranceThere are many forms of life insurance in the marketplace today. Some policies offer the opportunity build a cash value overtime, while others provide straightforward coverage without the risk.

Term life insurance is extremely popular because it is inexpensive, easy to understand, and doesn’t require any investing. However, it is not designed to provide lifetime protection, so most people will outlive their policy.

In this quick guide, we’ve explained the basics of term life insurance to help you determine if this type of insurance policy is the best fit for your needs.

Quick Article Guide:

1. What is Term Life Insurance?
2. What Term Length Should I Consider?
3. What Does Term Life Insurance Cost?
4. The Best Term Life Insurance Companies
5. No Medical Exam Term Life Insurance

What is Term Life Insurance?

Term life insurance is typically the most affordable type of life insurance policy which offers guaranteed level premiums for a set initial period, known a “term”.  It is generally purchased to cover a short term insurance need (10-30 years) rather than lifetime.

The most common initial terms are:

  • 10 years
  • 15 years
  • 20 years
  • and 30 years

After the initial term, premiums typically increase annually on an “annual renewable” basis.  This change to annual renewable premiums tends to come with a huge premium increase, so in order to avoid this, most term policies can be converted to a lifetime coverage option, such as whole life or universal life.

What Term Length Should I Consider?

It depends on why you need life insurance. Term insurance is most frequently used to replace income lost in the event of a family member’s unexpected death.

So if you think you will work 20 more years, a 20-year term policy might be the most suitable product for you. However, if you need life insurance to cover a shorter term need, such as a business debt obligation, a lower cost 10-year term policy could do the job.

The length of your term should outlast your need for the policy or the “life event” that you want to protect. As an example, if you recently took out a 30-year mortgage, you’ll want to buy a 30-year term to make sure your policy doesn’t expire before your house has been paid off.

What Does Term Life Insurance Cost?

The cost of a term life insurance policy is determined by a variety of factors that include the amount of coverage being purchased, or the policy’s face amount, and the length of the policy’s term. Longer terms are more expensive than shorter terms because the shorter your term is, the more likely you will outlive it.

Other factors that have an impact on the cost life insurance include your age, overall health, and gender. Women have a longer life expectancy than men and they typically pay about 40% less for their life insurance. In addition, if you have any hazardous hobbies like smoking or bungee jumping, you can expect to pay more than someone who is considered less of a risk.

Below we have provided some sample life insurance rates by age to help you estimate the cost a term policy:

Term Life Insurance Rates for a Male – 10 Year Term


*Displayed monthly rates are for qualifying individuals in excellent health and are provided for illustrative purposes only. Rates are accurate as of 12/07/2018.

Term Life Insurance Rates for a Female – 10 Year Term

Current Age$100,000$250,000$500,000$1,000,000

*Displayed monthly rates are for qualifying individuals in excellent health and are provided for illustrative purposes only. Rates are accurate as of 12/07/2018.

The Best Term Life Insurance Companies

Every life insurance company determines their own pricing and sets their own approval guidelines so the best life insurance company for your friend might not be the best option for you. Some insurance companies offer underwriting niches for specific health conditions which sets them apart from the competition.

For example, A+ rated Prudential offers their top class to healthy applicants that have a total cholesterol of 300 or less. On the other hand, an insurance company like State Farm offers much less leniency. The cholesterol limit for their best rates is only 180, which makes it impossible for most people to qualify for their lowest pricing.

Examples like this illustrate why it is so important to shop the market and compare rates from more than one insurance company. The easiest way to evaluate your options is to work with an experienced broker that represents at least twenty top-rated insurance companies.

At JRC Insurance Group, are shopping services are free, and we represent more than 50 top-rated insurance providers to save our clients money. Here are 10 additional tips to help you save time and money on life insurance.

No Medical Exam Term Life Insurance

Depending on your age and the amount of coverage you need, term life insurance without an exam may be available. In the past, these types of policy’s were a bit pricey, but since 2016, more companies have started offering no exam life insurance to applicants who are in average or better health causing the rates to decrease.

Most life insurance companies limit their no exam options to people that under the age of 60 and applying for $500,000 of coverage of less, but their are a handful of insurance providers that will offer more. Another option is to purchase more than one policy that doesn’t require an exam.

To learn more about purchasing life insurance without a medical exam, please see our article,Life Insurance without a Medical Exam

If you’re interested in purchasing term life insurance, give us a call. With just a few minutes of your time, we can recommend the appropriate term policy for your needs. Toll-free: 855-247-9555.

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