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You can buy term life insurance in a variety of ways: directly from an insurance company, through an agent or a broker, or online.
Term life is a relatively simple form of coverage. It lasts for a set period of time, such as 10 or 20 years, and pays out a death benefit to your life insurance beneficiaries if you die within the term.
This type of coverage is generally cheaper and easier to apply for than permanent life insurance like whole life, which usually pays out regardless of when you die and typically includes a cash value account.
Learn more about how and where to buy term life before you start shopping.
» MORE: Term life insurance definition
Where to buy term life insurance
The simplicity of term life means it can be sold from a variety of sources. Depending on your coverage needs and personal preferences, one method may appeal more than the others.
Buying term life online or through an app
Many insurers, brokerage firms and agencies allow you to shop for and buy term life policies online or with an app.
Some of these companies use accelerated underwriting, which employs algorithms to calculate your life expectancy instead of relying on traditional medical exams. This means qualifying healthy applicants can skip the exam and get instant life insurance coverage.
🤓Nerdy Tip
Buying coverage online may take just minutes. Take the time to read through the terms of the policy before finalizing your purchase, and reach out to the seller if you have questions.
» MORE: How long should your term life policy last?
Using an agent or a broker to buy term life
If you’re not sure which type of life insurance you need, a life insurance agent or broker can help you find the right policy.
A captive life insurance agent sells policies from one company only, which is useful if you want coverage from a particular insurer. In contrast, a broker or an independent agent can sell policies from various companies, so you can compare life insurance quotes from a range of insurers.
If you decide to work with a broker or an agent, you’ll want to find someone who’ll take the time to help you understand what kind of term policy you’re buying and answer any questions you have.
Insurance agents and brokers must be licensed by the state they do business in. You can check whether they’re licensed on your state’s department of insurance website.
🤓Nerdy Tip
Consider working with an agent or a broker who has the Chartered Life Underwriter (CLU) designation. This means they have demonstrated expertise with life insurance.
Buying term life directly from the insurer
In many cases, you can go straight to an insurer and buy coverage through the company’s website, over the phone or in person. When choosing a company, check its financial strength rating. This rating indicates the insurer’s ability to pay out claims in the future. You can look up financial strength ratings through agencies like AM Best, Fitch, Moody's and S&P Global. All of the insurers on our best life insurance companies list have an AM Best rating of A+ or higher.
Did you know...
Some companies sell products that are underwritten by other insurers. You'll want to check the financial strength of the company that issues the policy, not just the company that sells the coverage.
You can also check an insurer’s complaint history through the National Association of Insurance Commissioners. The NAIC keeps a record of complaints filed with state regulators, so you can see whether other customers had difficult experiences.
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Things to consider when shopping for term life
When comparing insurers, provide thorough, updated information — particularly about your health — to get the most accurate term life quotes. Note that your quote may be different from the final price. The rule for life insurance is: The younger and healthier you are, the lower your premium. When you complete a life insurance application, you may have to get a medical exam to see the final price.
Term life coverage will usually lapse if you miss a payment. So once you get a quote, make sure the insurance premiums fit in your budget.
If you’re not sure how much life insurance you need, you can use online calculators to help you determine the best coverage amount for you and your family.
More about term life insurance
Learn more about term life insurance with these useful resources:
Term life insurance: What you need to know
Term life insurance definition
Advantages of term life insurance
Best term life insurance companies
FAQs
That's why Orman says it's best to set up a term life insurance policy that will remain in effect until your children reach early adulthood. In fact, in a recent podcast episode, Orman suggested getting life insurance that will last until your kids reach age 23 or 24.
Why not to buy term life insurance? ›
If you outlive the term of your term life insurance, the policy expires and has no value. If you're looking for a way to leave money behind, a term life insurance policy most likely isn't a good fit. No cash value. Term life insurance doesn't build cash value.
What does Dave Ramsey recommend for life insurance? ›
If you have family members that depend on your earnings, you need life insurance. How else will they replace your income and avoid being left with debt? Dave Ramsey recommends term insurance as opposed to whole life, variable life or universal life insurance.
What are the negatives to buying term life insurance? ›
The primary drawback of term life insurance is its temporary nature. These policies are designed to provide coverage for a specific period, and if you outlive the term of the policy, there is no death benefit payout.
At what age should you stop term life insurance? ›
At What Age Is Life Insurance No Longer Needed? Life insurance is no longer needed for many people once they reach their 60s or 70s. At this point they have retired, their kids have grown up, and they've paid off their mortgage and other debts.
What is the best length for term life insurance? ›
Consider a life insurance term length of at least 30 years. If your spouse is your designated beneficiary, they would receive the death benefit if you pass away within those 30 years, and they could use the payout for the remaining mortgage payments.
What's wrong with term life insurance? ›
While you do your best to anticipate financial needs many years down the road, you might find you no longer need life insurance. With term life insurance, you can stop paying, which terminates the policy. Since there's no cash value, there's no money to walk away with.
What happens if you live longer than your term life insurance? ›
If a term policy expires, it typically ends without any action needed from the policyholder. The insurance carrier sends a notice, premiums stop and there is no longer a death benefit. If the policy included a return-of-premium feature, the policyholder would receive a check for the premiums paid during the term.
When should you get term life insurance? ›
Choose term life if you:
A term life policy can replace your income if you die while you still have major financial obligations, such as raising children or paying off your mortgage. Want the most affordable coverage.
Which is better, whole life or term? ›
Term life insurance tends to be much cheaper than whole life coverage because term policies do not have a cash value component and may expire without paying any benefits. Whole life insurance is a form of permanent life insurance that covers the person for their entire life rather than a fixed period of time.
Ramsey often recommends allocating investments into four types of mutual funds: growth, growth and income, aggressive growth, and international funds. This diversification strategy helps protect against market volatility and ensures a balanced approach to retirement savings.
Is term life insurance worth it? ›
One of the great things about term life insurance is that it gives your beneficiaries financial flexibility. They can use the payout for any financial priority, whether it's paying routine living expenses or funding college tuition.
When should you not buy life insurance? ›
Reasons Not to Buy Life Insurance
You may not need life insurance for a number of reasons, such as if you don't need to provide for someone after your death, if you have no room in your budget for premium payments, or if you have other plans to financially support your loved ones.
Can you cash out a term life insurance policy? ›
While you can't cash out term life insurance, you can sell your policy. Additionally, you may have other options if you want to change your coverage, such as lowering your premium payments or converting to a permanent policy.
What is a better option than life insurance? ›
Pre-paid funeral plan
Pre-paid funeral plans typically range from $10,000 to $25,000 and you can choose to pay for it up front or in monthly installments. This option can help you alleviate stress for loved ones during the grieving process, and may be a good alternative to life insurance for covering final expenses.
Why do financial advisors push term life insurance? ›
A financial advisor who sells life insurance can earn a large initial commission based on the first year's premium and 3% to 5% annual commissions for as long as the policy remains in effect.
Should seniors get whole life or term life insurance? ›
Term life insurance is likely your most affordable option, especially for seniors. Premiums for term life insurance policies are typically five to 15 times cheaper than whole life insurance. Low premiums can be particularly valuable for seniors on a fixed income. You only need short-term coverage.
Is it worth investing in term life insurance? ›
Term life insurance could be a good investment if you don't want to leave your loved ones with the burden of paying off debt or other expenses.
Is term life insurance good for retirement? ›
You have a decreasing projected financial loss if...
Life insurance tips: If you have a decreasing projected financial loss and have invested well for your retirement years, term life insurance may be your best option for retirement planning.
