If you’re looking for life insurance, you’ve seen both whole and term policies offered. So, what is term life insurance? And how does it differ from whole life? Term life insurance is a type of protection that has set term lengths and pays out to your beneficiary if you die while your policy is active. In some circumstances, your life insurance may also offer a payout if you become permanently disabled and unable to work.
In this article, we’ll take a closer look at term life coverage and how it works. Get to know some of the major players and compare quotes here.
What is Term Life Insurance?
Term life insurance, by definition, is a type of insurance policy that guarantees an agreed-upon payout of a death benefit to named beneficiaries in the event that the policyholder passes away during the term of the life insurance policy.
Some things to know at a glance:
- Terms typically last from 1 to 30 years
- Term life insurance is often sold at a less expensive rate than whole life insurance
- Unlike whole life insurance, term life usually does not offer a cash value benefit while the policyholder is alive
Best Term Life Insurance
How Does Term Life Insurance Work?
When you apply for a term life plan, you’ll choose an initial term for your policy. Your term is the length of time that your insurance policy is active. For example, if you choose a policy with a 20-year term, it means that your policy will be active for 20 years from the first month you pay for your insurance.
You’ll also name a beneficiary on your policy. Your beneficiary might be your children, your spouse, other members of your family, a business partner
If you don’t die during your policy’s term, your insurance policy expires and you don’t receive any type of benefit.
Your beneficiaries can use your death benefit in any way they like. There are no restrictions on what they can spend it on. Most beneficiaries use the death benefit for living expenses, debt and funeral expenses. If you have more than 1 beneficiary, you should specify how you would like your death benefit divided in your will.
Whole Life vs. Term Life
There are 2 major types of life insurance: whole life and term life. Let’s take a look at a few of the differences between these types.
Overview: Differences Between Term and Whole Life Insurance
- Whole life lasts for the duration of your life; term life has set terms, or the length of time that your policy is active.
- Whole life insurance has a guaranteed death benefit. Term life coverage does not; your beneficiaries will only be paid out if your policy is still active when you pass.
- Whole life policies include a cash benefit as well as a death benefit. You can only access the cash benefit while you are alive; a death benefit is paid out to your beneficiaries upon your passing.
- Whole life insurance typically has more expensive premiums than term life insurance.
- Term life may be easier to get online or more quickly; some policies are available as no medical exam life insurance coverage.
Whole Life Insurance
Whole life insurance guarantees a death benefit for your beneficiaries. Unlike a term life policy, whole life policies don’t have a term. It doesn’t matter when you die, your beneficiaries will receive your benefit as long as the premium is paid.
In addition to a death benefit, whole life insurance policies also include a cash benefit portion. Every month, a small percentage of your premium goes into a cash value that builds interest over time. You can borrow against it or take it out as a low-interest loan. The cash benefit portion of your policy can help you recapture some of the money you spend on premiums. You can only access this benefit while you’re alive. If you die, your beneficiaries don’t receive your cash benefit account — only your death benefit.
The downside of these policies is that whole life insurance policies are much more expensive than term life policies. Many whole life policyholders default on their policies because they can’t keep up with the payments.
Term Life Insurance
Term life insurance policies have a set term during which your policy is active. Unlike whole life insurance, your death benefit isn’t guaranteed with a term life insurance policy. Term policies also don’t have cash benefit portions. However, they are much more affordable and easier to get online. If you’re looking for cheap life insurance, term life insurance is a good place to start.
Who Needs Term Life Insurance?
Not sure if you need a life insurance policy? Let’s take a look at a few reasons to get a term life insurance policy.
These types of policies may be more affordable. Term life insurance policies are affordable enough for most people to afford. You can find term life insurance for as little as $20 per month from many companies.
Term life insurance policies have no limit on death benefit usage. Unlike some types of insurance (like mortgage payment insurance) there are no limits on how your beneficiaries use your death benefit with a term policy. Your family members can use your benefits for everything from paying off credit card debt to investing for the future.
Term Life Insurance Provider Reviews
Now that you understand how term life insurance works, let’s take a look at a few of our top picks that offer term policies.
Best for People with Children: Fabric
Fabric offers term life insurance for individuals between the ages of 21 and 60. The company believes that life insurance isn’t for you, it’s for your family. You can apply and see your price in under 10 minutes. Policies are issued by Vantis Life, a Penn Mutual Company, so your policy is backed by a highly rated, financially stable provider.
Apply online or in Fabric’s mobile app. It offers a range of term lengths and coverage amounts to help you find a policy that works for you.
Choose from 10, 15, 20, 25 or 30 year terms and coverage amounts from $100,000 up to $5,000,000.
$50K to $4M
- Works with top-rated life insurance carriers
- Online process
- Connects you with the right insurer
- Diverse policy options
Best for Health and Lifestyle Assessments:
Imagine using technology to be able to save on your life insurance. Sproutt’s got that area covered. Sproutt’s Quality of Life Index assesses your lifestyle and provides a personalized set of suggestions, recommendations and references based on medical research.
This way, you lead a healthy lifestyle and get access to the best life insurance products at the best rates. Take 15 minutes and get a personalized score. Based on this assessment,
Sproutt insurance advisors can help you determine what kind of life insurance is best for you. Simply answer a few questions to get a low-cost plan for your lifestyle, needs and budget.
- Instant personalized quotes
- 10 minute seamless application process
- Same-day coverage available
- Range of term and whole life coverage policies
- No medical exam or blood tests required (just answer a few health questions)
- Not available in New York
Best for No Medical Exam: Ethos
Ethos makes life insurance simple so you can focus your time on what matters most.
Ethos is a modern life insurance company using insurtech to streamline the process of getting coverage, making it easier, faster and better.
Ethos offers term life insurance to anybody between the ages of 20 and 65 and whole life insurance to people aged 65 to 84. From end-to-end, getting coverage can take less than a few hours with Ethos.
Getting a quote and seeing your policy and coverage options only takes a minute or two. Because they leverage technology like AI and machine learning, Ethos is able to cut out the extra steps that can make getting life insurance so arduous, like medical exams, lengthy doctors appointments and endless meetings with agents.
Also, their agents are non-commissioned and hands-off (unless you want their help!).
Ethos life insurance agents won’t waste your valuable time trying to upsell you products you don’t need — instead, they’re on call to answer any questions you may have and help you through the process. But it’s also possible to complete the entire process from quote to coverage completely on your own.
Get a free quote from Ethos today to get started.
up to $1.5 million
- Plans start at just $8/month
- Decent coverage options if you need insurance quickly and without hassle
- Offers 2 types of plans; does not offer whole or universal life insurance policies
- The 10- and 20-year plans not available to users under 21 or older than 55
Best for Simple Coverage: Bestow
If you’re looking to get term life insurance coverage without pages of legal jargon, consider a policy offered by Bestow.
Bestow is an online life insurance agency focused on simplifying and streamlining the insurance application. You can enroll in coverage if approved in Bestow’s simple online application — no invasive medical exam required.
You’ll be given a final price after completing the application which takes only minutes. With simple signups and policies available with up to $1 million worth of coverage, Bestow is an excellent choice for anyone looking to make getting term life insurance easier.
As little as 5 minutes
- No medical exams required
- Fast application process
- Variety of term options
- Not available to those age 61 or older
- Only offers term life insurance
Best Online Application: Lemonade
Lemonade offers life insurance for the next generation, with its 100% digital, no medical exams, no hassle application process. You can choose a term of 10, 15, 20, 25, or 30 years.
With Lemonade, you can get the coverage you need in just a few taps.
Here’s how it works:
- Answer a quick series of health and lifestyle questions from Lemonade’s friendly AI chatbot, Maya.
- Find out if you’re approved, fast. Once you’re approved, purchase your policy online.
- Sit back, relax, and get on with your life––knowing you’re covered.
Lemonade’s term life insurance offering has premiums starting as low as $9/month, if approved. Once you lock in your premium, your rate stays the same for your entire term. For a 30-year term example, if you’re paying $16/month in 2021, you’ll be paying $16/month in 2051. It’s as simple as that.
Anyone between the ages of 18-60 is welcome to apply for coverage up to $1.5 million. Trust us, your future self will thank you.
18 – 80
$50,000 to $25,000,000
Best for Multiple Quotes: Quotacy
Quotacy believes buying life insurance is a gift to your family members. Quotacy lets you shop anonymously until you’re ready to buy. All life insurance companies on Quotacy’s lists are best-in-class, financially secure and highly rated by independent consumer protection agencies. Take these steps to get the best life insurance match from Quotacy for your needs:
Step 1: Apply for coverage. Check for life insurance quotes, compare policies and apply online.
Step 2: Quotacy reviews your application. Quotacy ensures you’re matched with the best life insurance carrier for your health and lifestyle. The company reaches out if there is a carrier that’s more suitable.
Step 3: Quotacy conducts the underwriting process to determine whether you’ll be approved, keeps track of your paperwork and reaches out with any issues.
Step 4: You review and approve. Your agency then shares the final offer from the insurance company. You can accept the life insurance coverage or walk away altogether.
The amount of money that you wish to provide your family or business upon your death is up to you. Use Quotacy’s free online life insurance calculator to estimate how much you need.
20 – 60
$100,000 to $8 million
- Up to $8 million in coverage
- Price lock guarantee
- No policy fees
- 30-day money-back guarantee
- Adjustable coverage
- No policy riders
- Term life insurance only
Best for Simple Application Process: Ladder
- You can apply for life insurance coverage with Ladder right now via the online application.
- Find out whether you’re instantly approved.
- Accept your offer — including affordable prices and no hidden fees.
Ladder partners with Fidelity Security Life Insurance Company to issue LadderLife policies. In New York, Ladder partners with Allianz Life Insurance Company of New York.
Protect Your Family with Term Life Insurance
Buying term life insurance doesn’t need to be complicated. The best way to ensure that you’re getting the protection that you need is to fully read your policy’s terms before you enroll. Don’t be afraid to ask your insurance representative any questions you have about your policy, your premium and what your beneficiaries will receive if you die.
Frequently Asked Questions
What are the advantages of term life insurance?
What are the advantages of term life insurance?
A term life policy allows you to purchase coverage at a guaranteed premium for a limited amount of time. This structure makes term life an affordable choice to protect your family if you have a financial commitment that won’t last forever, like a mortgage or the cost of raising kids. A 20-year term life insurance policy is the most popular life insurance policy purchased to protect loved ones if the unexpected happens. Get a quote from top providers.
What are the advantages of whole life insurance?
What are the advantages of whole life insurance?
Whole life insurance, along with universal life insurance and some other variants, is designed to provide coverage for your entire life. This differs from a term policy that offers guaranteed premiums for a limited time. Permanent life insurance has a savings or investment element that helps the policy to build cash value, making it an asset that can be borrowed against or even sold if you no longer need the policy.
How much life insurance do I need?
How much life insurance do I need?
Many in the industry recommend that you carry 8-12 times your annual income in life insurance coverage. A more granular approach can be beneficial, however, and accounting for debt and ongoing financial commitments in more detail when choosing a coverage amount can better provide for your family than an arbitrary multiple of earnings. Get a customized quote for the best policy.
Explore More: BEST LIFE INSURANCE FOR SENIORS OVER 80
When you need life insurance, look no further than Sproutt. The company can give you lower rates based on your lifestyle, preferences and needs. Sproutt doesn’t forget about real people along the way. Instead, it enables a seamless, transparent way to match you with the insurance coverage that fits your needs.