Term life insurance
How it works, how long, and what it costs.
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Insurance, explained simply
Five minutes here will help you ask better questions and avoid buying the wrong policy.
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Know your number
Add debts, years of income, mortgage, and college. Subtract what you have. Try the calculator.
Pick the right tool
Term protects for a set time. IUL lasts for life and builds cash value. Annuities grow and pay income.
Compare carriers
The same person can get very different prices. Health, age, and carrier rules all matter.
Guides
Indexed universal life (IUL)
Caps, floors, loans, taxes, and risks.
Read the guide →Term vs. IUL
Side by side on cost, length, and cash value.
Read the guide →How much life insurance you need
The DIME method, with a calculator.
Read the guide →Living benefits
Use your policy during a serious illness.
Read the guide →Underwriting and approval
Health classes, exams, and better rates.
Read the guide →Annuities
Safe growth and income for life.
Read the guide →Annuity types compared
MYGA vs. FIA vs. SPIA vs. DIA.
Read the guide →401(k) rollover to an annuity
Rules, taxes, and steps.
Read the guide →For business owners
Key person, buy-sell, and bonus plans.
Read the guide →Glossary
The words agents use, in plain English.
- Beneficiary
- The person or people who receive the death benefit.
- Death benefit
- The amount paid to beneficiaries when the insured person dies. Generally free of federal income tax.
- Premium
- What you pay for the policy, monthly or yearly.
- Term
- The number of years a term policy lasts, such as 20 or 30.
- Underwriting
- How the insurer reviews your age, health, and lifestyle to set your price.
- Rider
- An add-on that changes or adds coverage, like living benefits or a child rider.
- Living benefits
- A rider that lets you use part of the death benefit while alive for a qualifying serious illness.
- Cash value
- The savings portion inside permanent life insurance such as IUL.
- Cap
- The most interest an indexed policy or annuity can credit in a period.
- Floor
- The least interest it can credit, often 0%, so index losses are not passed to you.
- Participation rate
- The share of an index's gain used to calculate your credited interest.
- Policy loan
- Borrowing against your cash value. Unpaid loans reduce the death benefit.
- Annuity
- A contract with an insurer that grows money tax-deferred and can pay income for life.
- Surrender period
- The years an annuity or policy charges a fee for large early withdrawals.
- Free look
- A short window after delivery when you can cancel for a refund.
Questions people ask first
Do I need life insurance if I am single?
Maybe. If someone would pay your debts, co-signed loans, or funeral costs, or if you support parents or siblings, a small term policy protects them. Buying young also locks in lower rates.
Do stay-at-home parents need life insurance?
Yes. Replacing childcare, cooking, driving, and household work costs real money. Many families insure a stay-at-home parent for several hundred thousand dollars.
When is the best time to buy?
Usually now. Price is based on your age and health when you apply, so waiting rarely makes it cheaper.
What does life insurance not cover?
Most policies pay for nearly any cause of death after the first two years. In the first two years, a suicide exclusion and a contestability period apply, and misstatements on the application can lead to a denied claim.
Sources and further reading
- National Association of Insurance Commissioners (NAIC): consumer guides to life insurance and annuities
- Virginia State Corporation Commission, Bureau of Insurance: verify an agent's license
- AM Best: insurer financial strength ratings
- IRS: tax rules for life insurance and annuities
Your price is based on your age and health today.
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