Term life insurance pays your family or dependents a death benefit if you die during the policy term. You choose the coverage amount and the length of the term, which is why term life is the most affordable type of life insurance.
What Is Term Life Insurance and How Does It Work?
Term life insurance offers affordable coverage for 10 to 30 years. If you die during the term, your beneficiaries receive a tax-free payout.
Find out if term life insurance is right for you.
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Updated: August 2, 2026
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Key Takeaways
What it is: Term life insurance gives you a death benefit, equivalent to your coverage amount, for 10 to 40 years as long as you pay your premiums.
You pay a fixed monthly term life insurance premium, and beneficiaries receive a tax-free payout if you die during the term.
Term life insurance cost depends on your age, gender, coverage amount, term length and lifestyle. For 40-year-olds with average health, a 10-year term policy with $500,000 coverage costs $34 (female) to $41 (male) per month. A 20-year term policy costs $47 (female) to $59 (male).
Who should buy it: Term life is a good option for parents, homeowners and anyone with temporary financial obligations like mortgages or dependents. Term life is less complex and cheaper than permanent life insurance options like whole life.
What Is Term Life Insurance?
Key Term Life Insurance Terms
How Does Term Life Insurance Work?
Term life insurance works through a simple exchange: you apply for coverage, choose a death benefit and a term length, then pay a fixed premium for that period. In most policies, both the premium and the death benefit stay level, so a $500,000, 20-year policy costs the same in year one as it does in year 19.
Most insurers ask health questions during the application, and some require a medical exam depending on your age and coverage amount. Once approved, you sign your policy and pay your first premium to activate coverage.
If you die while the policy is active, the insurer pays your beneficiaries the death benefit, tax-free. If you outlive the policy term, coverage ends, and you don't get your premiums back unless the policy includes a return-of-premium rider. From there, you can renew at a higher rate, convert to permanent coverage, or let the policy lapse if you no longer need it.
How Much Does Term Life Insurance Cost?
Term life insurance costs less than most people expect. Age and gender affect your rate the most, and term length adds to the difference. The younger and healthier you are when you apply, the less you'll pay throughout the entire term.
20 | Female | $23 | $30 |
Male | $29 | $36 | |
30 | Female | $24 | $31 |
Male | $29 | $38 | |
40 | Female | $34 | $47 |
Male | $41 | $59 | |
50 | Female | $70 | $102 |
Male | $90 | $137 | |
60 | Female | $158 | $286 |
Male | $227 | $395 | |
70 | Female | $397 | $844 |
Male | $600 | $1,132 |
Rates are based on average quotes for nonsmokers with average weight and health ratings. The coverage amount used for this comparison is $500,000. Actual costs will vary by profile, lifestyle, term length and coverage amount.
Rates increase steadily through your 30s and 40s, then rise sharply after age 50. Insurers price term life using actuarial mortality tables, and mortality risk itself accelerates faster starting in your 50s and 60s than it does in your 30s and 40s. A 20-year, $500,000 policy for a 40-year-old woman costs $47 a month; by age 50, the same policy costs $102, more than double. The rate increase from age 30 to 40 is smaller in dollar terms.
Term Life Insurance Rates by Age, Gender and Coverage
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Pros and Cons of Term Life Insurance
Term life insurance is an affordable way to get death benefit protection. It suits families, homeowners and anyone with financial dependents. Weigh the advantages of term life against its limits to find the right coverage for you.
- Affordable: Term life costs five to 10 times less than whole life insurance.
- Simple: You pay your premiums, and your beneficiaries collect the full death benefit if you die during the term.
- Flexible: You choose your coverage amount and stay free to cancel anytime, without a surrender penalty.
- Convertible: Switch to permanent coverage without a new medical exam, an option most insurers allow up to age 65.
- Temporary Coverage: Your coverage ends when the term expires, and you're uninsured unless you renew.
- No Cash Value: Term life is pure insurance with no savings component.
- Rising Renewal Costs: Extending coverage past the original term raises your premium, based on your age when you renew.
Types of Term Life Insurance
Level term life insurance works for most people. Consider other types of term life insurance only for needs like mortgage protection (decreasing term) or as a supplement to employer coverage (group term).
Level Term Life InsuranceYour life insurance premium and death benefit stay the same throughout the entire term. Level term insurance is the most common term life type and what most people should choose. Simple, predictable and covers most families' needs.
Decreasing Term Life InsuranceYour premium stays the same but the death benefit shrinks each year. Decreasing term insurance works well for mortgage protection since the coverage decreases as your loan balance drops. Cheaper than level term but has limited use cases.
Increasing Term Life InsuranceThe death benefit rises over the policy term to offset inflation or increased future expenses. Increasing term life insurance is useful for young families anticipating growing financial responsibilities like education or care costs. This effect can also be achieved with a cost of living adjustment rider.
Convertible Term Life InsuranceConvertible policies let you switch to permanent life insurance without a medical exam. It's a flexible option for people who may want lifelong coverage in the future but can't afford permanent insurance now. Converted policies come with higher premiums.
Renewable Term Life InsuranceThese policies let you renew your coverage at the end of each term without a medical exam. Premiums increase with age. Annual renewable terms are most common, but some insurers offer longer increments.
Group Term Life InsuranceEmployer-provided coverage, often one to two times your salary. It's free or cheap but has major limitations: coverage ends when you leave your job, you can't take it with you and amounts are limited. Good as extra coverage, not your primary policy.
Return of Premium Term Life InsuranceA return of premium rider refunds all your premiums if you outlive the policy term. Sounds appealing but costs two to three times more than regular term insurance. Most people get better value buying regular term and investing the difference.
- Direct Term Life Insurance
Direct term life insurance is a policy you buy straight from an insurer online or by phone. You don't have to go through an agent middleman, so there's usually a lower premium.
How Do You Buy Term Life Insurance?
Most insurers process a term life application in a few days to eight weeks, depending on whether you take a medical exam. No-exam policies can approve you within minutes.
- Compare quotes from multiple companies. Get quotes from at least three insurers before applying, since rates for the same coverage can vary from insurer to insurer.
- Choose your coverage amount and term length. Settle on a death benefit and term, such as $500,000 for 20 years, based on your income, debt and dependents.
- Complete the application and medical exam. Answer health and lifestyle questions, then take a short health exam if your insurer requires one.
- Review your offer and accept it. The insurer sets your final rate based on underwriting. Compare it against your original quote before accepting.
- Sign your policy and pay your first premium. Your coverage becomes active once you sign the paperwork and make your first payment.
AT WHAT AGE CAN YOU NO LONGER GET TERM LIFE INSURANCE?
Most insurers stop offering new term life policies around age 80 to 85, though options narrow after 70, and 30-year terms are rarely available past your late 40s or 50s. The actual age limit for life insurance policies varies by insurer.
How Much Term Life Insurance Coverage Do You Need?
Calculate how much coverage your family needs to replace your income, pay off debts and cover major expenses. A common starting point is 10 times your annual income. From there, adjust based on your outstanding mortgage balance, other debts like student loans and credit cards, your children's future college costs, and the years remaining until your dependents are financially independent.
Another way to estimate coverage is the DIME method, which adds up four specific numbers:
- Debt: Total your non-mortgage debts, such as credit cards, student loans and car loans.
- Income: Multiply your annual income by the number of years your family would need support.
- Mortgage: Add your remaining mortgage balance.
- Education: Add estimated future college costs for each child.
The total gives you a coverage estimate tailored to your specific obligations, rather than a flat income multiple. You can also get a quick estimate using our life insurance calculator.
Life Insurance Coverage Calculator
Use this simple calculator to find out how much life insurance you need in just a few minutes:
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Enter your total yearly income before taxes.
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Choosing Your Term Length by Life Stage
Term length depends on how long your financial obligations will last, not just your age.
- New parents and young families: A 30-year term is the better fit. It covers you until your children are grown and typically outlasts a 30-year mortgage.
- Homeowners in peak earning years: Match your term to your mortgage. A 20-year term usually covers what's left on a loan taken out in your 30s or 40s.
- Near-retirees with a shrinking mortgage and grown children: A 10-year term covers the final stretch before retirement, when your income-replacement needs are lower.
- Empty nesters with no debt and independent children: A new term policy often isn't necessary. Permanent coverage or a final-expense policy is the better choice if your goal has shifted to estate planning or funeral costs.
Term Life Insurance vs. Whole Life Insurance
Coverage length and cash value set the two policies apart. Term life lasts a set number of years and has no cash value component. A whole life policy stays in force for your entire life, and part of each premium builds cash value you can borrow against later.
Length of Coverage | 10 to 40 years, depending on the term | Your entire life, as long as you pay premiums |
Cash Value | None | Builds over time; you can borrow against or withdraw it |
Premium Behavior | Level for most of the term | Level for life |
Death Benefit | Fixed at the amount you choose | Fixed, plus dividends in some participating policies |
Convert to Permanent Coverage | Yes, in many policies, often up to age 65 or 70 | Not applicable |
Term Life Insurance Policy: Bottom Line
Term life insurance gives you the most coverage for the least money. If you have dependents or debts, it's the best choice. Rates increase with age and health problems can make coverage expensive or impossible to get. Healthy 30-year-olds can get a 10-year term policy with $500,000 coverage for around $24 (women) and $29 (men) per month, according to MoneyGeek's rate survey.
Choose level term coverage with a longer term (20 or 30) with enough death benefit to replace your income and cover major debts.
Term Life Insurance: FAQ
Term life insurance makes sense for people with temporary financial obligations and dependents who rely on their income. If someone depends on your paycheck or you have debts that would burden your family, term life provides financial protection at an affordable cost.
It works best for young couples and newlyweds, parents with dependent children, stay-at-home parents, single parents and business owners who want to fund buy-sell agreements, cover business loans or compensate for lost key person income.
Yes, you can cancel a term life insurance policy anytime by stopping premium payments. Your coverage stops right away with no penalties. You won't get back any premiums already paid since standard term life policies have no cash value.
No. Term life insurance benefits aren't taxable to beneficiaries. They get the payout tax-free, but estate taxes may apply to very large policies if the death benefit is included in the insured's taxable estate.
Yes, but only after a waiting period. Most term life policies exclude suicide during the first two years. If death occurs during that time, the insurer returns the premiums paid instead of issuing the death benefit. Once the two-year period passes, the policy provides coverage.
Most term life policies include a 31-day grace period. Paying within that window keeps the policy active. Missing the deadline causes the policy to lapse, which ends coverage. Reinstatement may involve additional forms or updated health information.
Yes. You can hold more than one term life policy as long as the combined coverage aligns with your income and financial obligations. Some policyholders choose this approach to align different policy lengths with expenses such as a mortgage, education costs or income replacement needs.
Term life costs less, lasts a set number of years and has no cash value. Whole life costs more, builds cash value and lasts your entire life. Monthly rates for a $500,000 policy at age 40 average $47 to $59 for term and $540 to $574 for whole life.
The main downside is that coverage ends when the term expires. If you still need protection afterward, you'll pay much more to renew or requalify for a new policy at your current age and health. Term life also builds no cash value, so you can't borrow against the policy or get money back if you outlive the term.
Term life insurance shoppers need reliable rate data to budget for coverage that protects their families. We built our analysis around the factors that determine what you'll actually pay.
Our quote analysis: We examined 248,399 life insurance quotes from 16 companies across 250 ZIP codes nationwide. All rates reflect 2025 data.
Sample profiles: Quotes are for nonsmokers with average health.
- Men: 5 feet 9 inches tall, 160 pounds
- Women: 5 feet 4 inches tall, 120 pounds
Why we varied the profiles: Your age, gender, height, weight, tobacco use and health rating all affect your premium. We modified each factor to show how rates change across different customer types, term lengths and coverage amounts.
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About Mark Fitzpatrick
Mark Fitzpatrick, a licensed Property and Casualty (P&C) Insurance Producer in Connecticut, is MoneyGeek's resident expert in insurance and economics. He has spent nearly a decade covering the market, first at LendingTree and now at MoneyGeek, where he analyzes hundreds of carriers and millions of rates across auto, home, renters, health and life insurance.
His work has appeared in The Washington Post, The New York Times and NPR. He draws on independent cost and consumer experience data, and no insurance company partnerships influence his recommendations.
Mark studied at Boston College before earning a master's in economics and international relations from Johns Hopkins University. Before MoneyGeek, he worked in financial risk management at State Street. He's also a five-time “Jeopardy!” champion.