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Term life insurance is often a good choice for people looking for an affordable life insurance option to cover specific financial obligations. For example, you might want term life insurance to cover the years remaining on a mortgage or the years until your kids have graduated from college.
But pricing is only one part of a good term life insurance policy. You will want to consider the benefits of the policy that could become significant several years after you purchase the coverage.
We used data provided by Life Quotes, an independent online life insurance agency, to assess the best term life insurance companies based on rates and coverage features.
Strong points: The Transamerica is our first choice because of its first-rate political advantages and very good rates. You can renew your policy up to age 105, and living benefits are available for chronic illnesses, allowing you to collect your own cash death benefits if your illness qualifies.
Potential disadvantages: If you want to turn your contract into a permanent contract, you will only have up to 70 years to do so, unless you were in excellent health at the time of your request.
Strong points: AIG term life insurance offers a wide range of benefits and excellent rates for a variety of ages and levels of coverage. You can renew your contract for up to 95 years.
Potential disadvantages: There are no living benefits and the option to convert to a permanent policy is only available up to age 70 (some competitors allow up to age 75).
Strong points: Pacific Life has great prices and great benefits.
Potential disadvantages: No living benefit and possibility of conversion to permanent policy up to age 70 only. You can renew your policy up to age 90, while many companies allow conversion at older ages.
Strong points: John Hancock has very competitive rates compared to the best competitors. You can renew a contract for up to 95 years.
Potential disadvantages: No living benefits and stricter coverage reduction rules compared to many other insurers. You will not be allowed to reduce your coverage in policy years one to three, then a 50% decrease is allowed in policy years four to six.
Strong points: Lincoln Financial offers excellent coverage features combined with competitive rates. You can renew a contract for up to 95 years.
Potential disadvantages: No subsistence benefit is included.
Strong points: The protection is worth considering if you are shopping around for a term life.
Potential disadvantages: The maximum ages for renewal or conversion to a permanent life insurance policy are lower than the ages of some other companies.
Strong points: SBLI has very competitive rates and a better ability to decrease the amount of your coverage compared to other insurers.
Potential disadvantages: There are no living benefits and you can only renew your policy until you are 85 years old. Other leading competitors have higher guaranteed maximum renewal ages.
Strong points: Securian Financial offers more opportunity to reduce coverage compared to other insurers.
Potential disadvantages: Term life insurance rates are good, but you can always find better rates among the best competitors. There are no living benefits and guaranteed renewal is only guaranteed up to age 85.
What is term life insurance?
As the name suggests, a term life insurance policy covers a certain length or period of time. You choose the length of the policy when you buy it. Terms usually start at five years, but can also be 10, 15, 25, 30, 35, or even 40 years.
You may be able to renew a term life insurance policy or convert it to a whole life policy. Unlike a term life insurance policy, a whole life insurance policy provides lifetime coverage and accumulates cash value.
In addition to selecting the length of a term life insurance policy, you select the amount of coverage. The amount of coverage can be in the millions of dollars. If you die during the term of the policy, your named beneficiaries receive a payment called a death benefit.
Who is term life insurance for?
Term life insurance can be ideal for people who need life insurance to cover a specific large debt or a defined period of time. This can be particularly appealing to a parent who is raising young children and wants their children to be financially protected should the parent die.
Here are four reasons someone might buy term life insurance:
- It can replace income lost due to the death of the insured.
- He can pay off a large debt, like a mortgage, to ease the financial burden on a family.
- It can cover school fees in the event of the death of a parent.
- He can pay the funeral expenses.
Tips for buying term life insurance
Here are five tips for getting term life insurance.
- Consult your financial advisor. Before you start purchasing a term life insurance policy, consult a financial advisor to assess your current and future finances. This review can help you determine if term life insurance is best suited to your more important financial goals.
- Determine the length and coverage. To decide on the best length for a term life insurance policy, consider the length of debt or situation you want to cover. For example, let’s say you recently bought a new home with a 30-year mortgage. In this case, you may want to purchase a 30 year term life insurance policy.
- After determining the length of the policy and the amount of coverage, compare the rates of several insurers. This can be done online or with the help of an independent insurance broker or agent.
- See if the policy offers a conversion option. This option will give you some time to convert the term life insurance policy to a permanent life insurance policy, such as universal life insurance. This gives you the option of switching to a permanent policy without going through a new medical examination.
- Prepare to complete the application. When completing an application for a term life insurance policy, be prepared to answer questions about your medical and family history. You will likely be asked questions about things like the medications you take, your driving record, your smoking or drinking habits, and dangerous hobbies. Whatever you do, don’t lie on the app. If an insurer determines that you have misrepresented information, your claim may be denied. Worse, if the life insurer finds out that you have misrepresented information only after purchasing the policy, the policy may be void.
We used the data provided by Life Quotes to rate term life insurance companies based on:
Two-thirds of the total score: term life insurance rates. , at 30, 40 and 50 years old.
One third of the total score: policy features. This category used living benefits (which may offer an early withdrawal option if you fall ill and qualify for living benefits), the ability to convert term life insurance, guaranteed policy renewal and the possibility of modifying the sum insured after you. buy the policy.
John Egan is a freelance writer, editor and content marketing strategist in Austin, Texas. His work has been published by Experian, Bankrate, National Real Estate Investor, US News & World Report, Urban Land magazine, and other media.