Term life insurance can provide substantial life insurance coverage at an affordable cost, although only for a limited period of time. Term life policies are sold by almost all major life insurance companies to provide a greater amount of protection for specific situations. Young families with small children find the low cost of term appealing, while beneficiaries can enjoy a relatively large death benefit for the money if the worst should happen.
Term life insurance is designed to provide a set amount of life insurance protection for a set period of time. This type of insurance has no savings component like permanent policies do, and the coverage from a term policy will always expire at the end of the term. Term insurance is designed primarily for younger people in good health who need a large amount of coverage to provide for their loved ones. The cost of term insurance becomes prohibitive as the insured moves into his or her later years.
Best term life insurance companies
The best term life insurance company for one person may not be the best for another, as different life insurance companies cater to various demographic segments of consumers. Some carriers focus on current and former members of the military, while others zero in on people with certain health conditions, such as diabetes or respiratory illnesses. But here we list five of the most popular and well-established life insurance companies that offer term policies to the public.
|Company||2020 J.D. Power Rank||AM Best||S&P|
|Mutual of Omaha||789||A+||AA-|
The ratings provided by AM Best and Standard & Poor’s rate each carrier’s financial strength. The J.D. Power ranking is a score that rates the company’s customer service based on customer feedback.
This life insurance company has been insuring consumers in the U.S. for over 150 years now, which may be reflected in high J.D. Power customer satisfaction rankings and represents its deep understanding of families’ financial protection needs. Its term policies allow you to select your coverage period based on either a set amount of years or until a specific age, depending on which option is most suitable for you. These plans are all also convertible to whole life insurance should the need arise, meaning your policy can adjust as your needs evolve.
State Farm offers a multitude of products when it comes to term insurance, but its return of premium policy is a unique offering. With it, policyholders can choose between a 20- or 30-year payment term and receive their premiums back if they outlive the term. If you decide you want longer coverage, the return of premium policy can be renewed annually until the age of 95, so it can cover most insureds for their entire lives. The return of premium option comes at an additional cost, but also builds cash value. Cash value is generally not included in term life insurance policies, but may be useful in emergencies where money needs to be borrowed against your account.
Mutual of Omaha
This life insurance company is well-known for the plethora of additional riders that can be added to its term life policies. It should be noted that not every rider can be used with every type of policy., To verify how much coverage you need and which riders can be added to your policy, you may want to consider consulting with an agent.
Principal Financial offers term life insurance policies with an option of conversion at any time to a whole life policy. Policyholders have the ability to choose term lengths that fit their current circumstances, whether they only need coverage for a single year or prefer longer 10-, 15-, 20- or 30-year periods. If you do decide to convert your policy, you may receive permanent coverage without the added need of proving your health. Principal Financial also offers a complete range of cash value policies, including whole life, universal life and variable universal life.
USAA is only available to military members, veterans and their immediate family, but provides life insurance policies worthy of consideration for those who qualify for coverage. Most standard life insurance policies do not pay a death benefit if the insured dies from an act of war. USAA is an exception to this practice, providing specific coverage to service members while they are deployed. This coverage can be purchased on top of the group term life insurance that all members of the military can get through the government. USAA’s policies can also pay out an additional $100,000 of benefits for service members up to age 35 who marry or have children. In fact, all of the service member’s children can be added to the policy for less than an additional $8 per month.
How to find the best term life insurance company for you
There are several factors to consider when shopping for a quality term life insurance policy. Since your life insurance will ultimately be responsible for providing the coverage you want for your family, these considerations may be beneficial to keep in mind when determining which provider is right for you. In addition to policy types, you could consider:
- The financial strength of providers — to provide a measure of claim payouts
- Multiple quotes — to see how similar levels of coverage and term lengths compare in terms of price and benefits
- Assessing your situation — to get a better understanding of why a term life insurance policy fits the stage of life you are in. Questions you may ask yourself include if you are purchasing it as a temporary form of affordable protection or if the term lengths align with your current circumstances, like leaving protection for your children.
With life insurance being such an impactful investment for the care of your loved ones, consider giving yourself ample time to fully think your provider and policy options through. Many insurers’ websites include information about ways for you to contact an agent in order to discuss your needs in more detail.
Frequently Asked Questions
What is the difference between term and whole life insurance?
Term insurance is designed to provide pure death benefit protection for a specific period of time, such as 20 years. When the term expires, the coverage goes away. Whole life insurance is a form of permanent insurance, where cash value accumulates inside a tax-deferred savings component that is attached to the policy. Whole life insurance is designed to remain in place for the insured’s entire life as long as the premiums are paid.
What factors impact my life insurance premium?
Your age, weight, health conditions and occupation are just some of the factors that will determine how much you pay for term insurance. The amount of coverage that you want to get is another one. Insurers consider multiple aspects of your lifestyle to set premiums. For example, the use of tobacco usually leads to higher premiums as a reflection of associated health risks. In general, the younger and healthier you are, the lower the cost of the premiums will be.
Which is better, term or permanent insurance?
There is no one right answer to this question. Term insurance usually can provide a much larger death benefit than permanent policies at a much lower price. But if you know that you are going to need to have some life insurance at the end of your life, such as to pay for estate taxes, then a permanent policy may be the way to go. It all depends upon your financial situation and your objectives. Consult with your financial advisor or life insurance agent for more information on term vs. whole life and which is better for you.