Term Life Insurance Policy FAQ

How much does a term life insurance policy cost?

The cost of term life insurance will vary depending on many different factors, including the risk presented by the policyholder and the type of policy selected. Typically, the younger an applicant is, the lower their rates will be.

Insurance companies also take into consideration mortality tables to help determine risk. Term life insurance for men typically costs more than term life insurance for women who, according to the mortality tables, are expected to live longer on average.1

1 https://www.ssa.gov/oact/STATS/table4c6.html

Can you get your money back at the end of a term life insurance policy?

Most term life insurance policies don't include any money back when the policy ends, but a specified type of term life insurance, called a “return of premium” policy, allows for the recoupment of premium payments if the policyholder outlives the policy term. Return of premium term life insurance policies typically cost more than standard term life insurance policies.

How much coverage do you need?

The amount of coverage needed under a term life insurance policy will depend on the specific needs and circumstances of the policyholder and beneficiaries, but these are some things to consider:

Many policyholders may choose death benefits which are at least ten times the policyholder's salary, with a consideration of college expenses for beneficiaries.

The appropriate coverage amount could also change depending on age. For example, younger individuals may want to consider coverage for thirty times their current salary, versus older or retired individuals who may choose a coverage level closer to their net worth.

Can you cash in your policy?

Term life insurance policies do not include cash value. If accumulating cash value is desired, a whole life insurance policy may be more beneficial as whole life insurance policies may be cashed in for cash value.

Can you turn term life insurance into permanent life insurance?

Some policyholders may reach the end of their term and wish they had more coverage. Is it possible to then turn term life insurance into permanent life insurance? Many insurers offer convertibility or the ability to change term life insurance to permanent life insurance like whole life insurance but, in general, most insurers will require the policy to be converted early on during the term—often within five years.