Term life insurance is one of the most recommended life insurance types, but how does term life insurance work? Before deciding on any insurance policy, it is essential to understand the nuances of it. How do we define level term life insurance and who is it best for? Is level term life insurance worth it?

Advertising Disclosure
This advertising widget is powered by HomeInsurance.com, a licensed insurance producer (NPN: 8781838) and a corporate affiliate of Bankrate. The offers and clickable links that appear on this advertisement are from companies that compensate Homeinsurance.com LLC in different ways. The compensation received and other factors, such as your location, may impact what ads and links appear, and how, where, and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available to you as a consumer. We strive to keep our information accurate and up-to-date, but some information may not be current. Your actual offer terms from an advertiser may be different than the offer terms on this widget. All offers may be subject to additional terms and conditions of the advertiser.

Compare life insurance providers quickly and easily

See which provider is right for you.

Your information is kept secure
Caret DownCaret Up
Please select age
Caret DownCaret Up
Please select Coverage amount
Caret DownCaret Up
Please select Policy type
Powered by HomeInsurance.com (NPN: 8781838)
Insurance Disclosure

This advertising widget is powered by HomeInsurance.com, a licensed insurance producer (NPN: 8781838) and a corporate affiliate of Bankrate. HomeInsurance.com LLC services are only available in states where it is licensed and insurance coverage through HomeInsurance.com may not be available in all states. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

Why Lemonade? It's a fresh twist on life insurance: easy, accessible and affordable.
See more providers in
Choose from insurers in

Life insurance policies make a payout to your beneficiaries in the event that you pass away. These policies require premium payments like any other insurance. In return, the beneficiaries receive a payout, known as the death benefit, upon your death. One common use for life insurance is to protect against losing the primary income earner in a family. A level term life policy would be one way to provide a financial safety net in that scenario.

What is level term insurance?

There are multiple types of term life insurance policies. Rather than covering you for your entire lifespan like whole life or universal life policies, term life insurance only covers you for a designated period of time. Policy terms generally range from 10 years to 30 or more years, although shorter and longer terms may be available. Level term life insurance policies maintain the same death benefit level and premium level over the life of the policy.

When applying for a policy, you will specify and list your chosen beneficiaries. You will also select an amount for the death benefit and a length for the policy — for example, you may choose a 10-year term with a $100,000 death benefit. If you pass away during the policy term, your beneficiaries receive the death benefit from the policy.

Types of level term insurance

Level term life insurance generally comes with one of several policy term options:

  • 5-year terms: Shorter policies are often best for those who only need coverage for a few years. For instance, people who are within five years of retiring or whose children are within five years of moving out of the house or graduating from college may want to consider a 5-year term.
  • 10-year terms: 10-year term life insurance policies are best for those who need up to ten years of coverage. This might be until children are grown, until debts are paid off or for any other decade-long financial obligation.
  • 15-year terms: 15-year term policies may cost you more over time but cover you for longer. Longer periods are often best for people with more long-term needs, such as those paying off a mortgage, paying down larger amounts of debt or with young children.

Longer and shorter policy terms may be available, such as 20- or 30-year terms. Additionally, some companies may offer terms even shorter than 5 years.

Level term versus whole life insurance

Whole life is a type of permanent life insurance, meaning that the policy lasts for a person’s lifetime. Term life only lasts for a set length of time, determined when the policy is written. Another key difference is that whole life policies include a cash value investment component while term life does not.

Policy length Extra benefits
Level term insurance A set number of years Fixed premiums
Flexible terms to suit individual needs
Lower cost
Whole life insurance Life Cash value component
Loan options
Coverage lasts for the whole of one’s life

Who needs level term life insurance?

Choosing the right insurance can be tricky. Term life insurance is often recommended over other life insurance types for those who are less experienced with life insurance in general. Part of this may be due to the simplicity and relative cheapness of term life compared to permanent life policies. As a result, people interested in buying life insurance but who are unfamiliar with its nuances might consider starting with term life.

Many people choose to purchase level term life insurance when they know they are entering a financially significant time in their lives. People taking out mortgages may decide to buy a term policy that lasts until their mortgage is paid off. People with children going into expensive schools may take out a policy to last until their children are expected to graduate.

In general, level term life policies can benefit those entering a period where their loved ones would be disproportionately financially affected by their death. This can span many different scenarios, but the goal of purchasing level term life insurance is to provide compensation for the financial loss associated with the policyholder’s passing.

What is the cost of level term life insurance?

How much is term life insurance? Many factors go into determining the rates on a level term life insurance policy. Two of the most important factors are the term length of the policy and the death benefit amount. Age is another significant component. The older a person is, the more expensive a life insurance policy is likely to be.

Health works in a similar way to age. Those who struggle with their health will likely pay higher premiums than those who do not experience health issues. Males are generally more expensive to insure than females. This is partly because women, on average, live longer than men. Risky behaviors may also contribute to policy premiums or may exclude you from coverage.

Frequently asked questions

Who is the best life insurance company?

The best life insurance company and policy will depend on the person looking, where they live, their personal metrics (health and other price factors) and what they need from their policy. It is best to compare quotes from several different providers and talk to an agent to ensure your policy will meet your needs.

Are there other types of term life insurance?

Yes, there are a few different kinds of term life insurance. Annual term life insurance is a yearly renewable policy that guarantees the ongoing option of coverage for a set number of years. These policies have to be renewed every year. Decreasing term life insurance is unusual in that, over time, the payout size decreases, allowing for relatively low premiums.

How do I buy level term life insurance?

The first step is to determine what you need the policy for and what your budget is. Once you have a good idea of what you want, compare quotes and policies from several companies. Most companies will allow you to apply online but also support in-person or over-the-phone interactions. After the application process, if approved, your policy will become active as soon as you make the first payment.