How term life works
You choose a coverage amount and a term length. Your premium usually stays the same for the whole term. If the term ends while you’re living, the coverage stops and there’s no payout, unless you renew or convert the policy.
Most people pick a term that lasts until a big responsibility is over: the mortgage is paid, the children are on their own, or retirement savings are in place.
Choosing a term length
| Term | Often chosen for |
|---|---|
| 10 years | A short-term debt or bridging the years until retirement |
| 15 years | Children in their teens or a loan with 15 years left |
| 20 years | Young children or a newer mortgage |
| 30 years | A new 30-year mortgage or a newborn |
Features to ask about
- Conversion: lets you switch to permanent coverage later without a new medical exam, within the policy’s time limits.
- Renewal: some policies can be renewed each year after the term ends, at a higher price.
- Riders: options such as a waiver of premium if you become disabled, accelerated benefits for terminal illness, or coverage for children.
- Return of premium: some policies refund your premiums if you outlive the term, at a higher cost.
Is term life right for you?
Term life is a good fit if you want the most protection for your money during your working and family-raising years. If you want coverage that lasts your whole life or builds cash value, look at whole or universal life.
Common questions
What happens when my term life policy ends?
Coverage stops. Depending on the policy, you may be able to renew it yearly at a higher price or convert it to a permanent policy without a medical exam before a deadline.
Can I cancel term life insurance?
Yes, you can stop paying and the coverage ends. Term life has no cash value, so there’s nothing paid back to you, unless you bought a return-of-premium policy.
Is a 20-year or 30-year term better?
Pick the term that covers your longest money obligation. A longer term costs more each month but protects you longer. Some people combine two policies with different terms.