Term life insurance
Pure life cover for a fixed period - 10, 20 or 30 years - with no savings component.
Pure life cover for a fixed period - 10, 20 or 30 years - with no savings component.
Term life pays a set death benefit if you die during the policy's term, and pays nothing if you outlive it. The premium is level for the whole term because the insurer is pricing mortality over a known window, which makes term the cheapest way to buy a large amount of cover - the standard advice being to buy enough for the years your income supports others (mortgage, children, income replacement) and to size the term to the obligation, not to your life expectancy.
Two structures compete: level term locks the premium and benefit for the full period, while annual renewable term re-prices each year - cheap early, increasingly expensive later. Convertible term lets you exchange for permanent cover later without new medical underwriting, a clause worth having. When the term ends with the obligation still standing, the gap is the plan's risk: reassess coverage as a mortgage shortens or a child approaches independence rather than assuming the original size still fits.
Worked example
A 35-year-old non-smoker buying $500,000 of 20-year level term commonly pays in the neighborhood of $25-35 a month - the same cover as a whole-life policy at a fraction of the cost, with the difference being no savings value at the end.
Related terms and tools
Suggest a change
Spotted an error, an out-of-date number, or something we should improve? Tell us — the page title and address are attached to your email automatically.