Best Term Life Insurance Companies

Final Verdict

All of the best term life insurance companies have positive attributes and strong financial ratings. Some companies have outstanding customer service, and others offer wellness discounts to their customers. Overall, we recommend checking out Haven Life Insurance Agency. It offers competitively priced term life insurance and has a fast online application process.

Compare the Best Term Life Insurance Companies

Guide to Choosing the Best Term Life Insurance

What Is Term Life Insurance?

Term life insurance is a temporary life insurance coverage that offers a guaranteed death benefit to the covered individual if they die while the policy is in force. Term life insurance is also known as “pure life insurance,” as it typically only offers a death benefit but no additional coverage or savings component found in permanent life insurance products.

Term life insurance is offered for specific lengths, typically from five to 30 years, and premiums stay the same throughout the policy. After the term policy expires, individuals can renew the policy, convert it to a permanent policy, or allow the coverage to end.

Key Term Life Insurance Definitions 

When researching term life insurance policies, you’ll want to know a few phrases to understand exactly what is included in the policy.

• Face value: The face value of an insurance policy is the payment amount that the beneficiaries will receive should the insured die while the policy is in force.
• Death benefit: The death benefit is similar to the face value of the policy, referring to the payment amount that will be sent to beneficiaries upon death. Policy death benefits can be reduced by exercising an accelerated benefit on the policy, allowing the insured to withdrawal a percentage of the death benefit early.
• Instant-Issue: While many term policies require a medical exam to qualify, instant-issue policies allow the applicant to instantly acquire coverage, typically through an online application. These policies are for younger, healthy individuals and offer limited coverage (typically under $1 million).
• Beneficiary: The beneficiary is the person (or persons) who will receive the death benefit of an issued life insurance policy. Life insurance policies require at least one beneficiary be designated.
• Premium: The premium is the cost of a life insurance policy. This is typically paid in monthly installments for the life of the policy but can also be fully paid up by a certain age or after a certain number of years. Some policies offer a single pay option, allowing policy premiums to be fully paid in a single lump sum.
• Riders: A rider is a life insurance policy enhancement that offers additional benefits or custom coverage options to the insurance policy. This may include coverage for a spouse or children, additional payouts for accidental death, or the ability to access policy funds early. Rider fees are typically billed as a small percentage of the policy premium or a flat annual fee.

Who Needs Term Life Insurance? 

Term life insurance coverage is ideal for anyone, particularly married couples, parents, and those with a mortgage, who want to replace their income and protect their assets should they pass away prematurely. Younger individuals will benefit from the lower cost of term life insurance for a large amount of coverage and the ability to “stack” additional policies as their needs increase. 

How Much Term Life Insurance Should I Get?

The amount of term life insurance coverage you should carry depends on a variety of factors:

• Age
• Debts
• Income
• Years until retirement
• Family status

Financial experts recommend getting enough term life insurance to equal at least 10 times your annual salary as income replacement. In addition, covering enough to take care of any current debt obligations will ensure that your beneficiaries do not need to carry that burden. Your coverage amount may change during your lifetime as well. For instance, a young couple with a mortgage and two kids living at home may need more than 10x their annual salary in term coverage, while an older couple with no mortgage and no children at home may need far less.

Here’s a quick example of how to determine how much term life insurance coverage you may need:

Bob has a wife and two kids. He makes $80,000 per year, as does his wife, and they carry $300,000 in debt. Since his wife also makes $80,000 per year, instead of the recommended 10x of his salary in coverage, he chooses to opt for a coverage amount of 5x his salary, along with an additional $300,000 to cover their debts gets similar coverage.

How to Lower Your Life Insurance Premiums

Life insurance premiums are based on several factors, including age, location, health status, smoking status, coverage amount, and term length. There are some ways to lower your monthly premiums while ensuring you still have the right amount of coverage:

• Perform healthy activities: Since your health status will affect your rate, getting daily exercise and avoiding high-risk activities may lower your premiums. Some insurers even reward those who exercise regularly.
• Quit smoking: Smoking can cause life insurance rates to be much higher, and quitting can lower your rates. Some insurers will even offer lower premiums to smokers who are on a program to quit.
• Shorter term length: The longer your term life insurance policy length, the higher your premiums will be. If you only need coverage for a short time (ex., five years), your policy premiums will be lower.
• Less total coverage: Less overall coverage will lower your premiums. You can get a smaller amount of coverage when you have fewer obligations, but make sure you have enough to cover your needs. Don’t try to save a few dollars per month at the risk of being underinsured.

How to Choose the Best Term Life Insurance

The best term life insurance policy is one that fits your family, your needs, and your budget. Understanding how much coverage you need and what you would use it for are essential steps in choosing the best policy.

To get the best life insurance policy for your situation, and one that fits your budget, we recommend the following steps: 

• Step 1: Figure out how much coverage you need and how long you want to be covered. This number may fluctuate over your lifetime, so you may want to talk to a financial planner about what makes sense for you and your family.
• Step 2: Talk to a life insurance broker and ask them to pull quotes for term policies. You may also be able to get rate quotes online as well.
• Step 3: Compare quotes from different providers and choose one that meets your requirements, offers the best coverage, and fits your budget.
• Step 4: Schedule a medical exam if necessary. If not, apply for and wait to be approved for the policy.

To find a quality term life insurance provider, you will want to compare prices and make sure they are a reputable company with a strong financial backing, as this indicates its ability to pay claims. Rating agencies such as J.D. Power and AM Best help evaluate insurance companies' customer satisfaction and financial strength. 

Remember that it's OK to get multiple different quotes to find the best policy. Do your research, ask questions, and speak with a financial or insurance professional if necessary. 

Frequently Asked Questions

What Are the Differences Between Term and Whole Life Insurance? 

Term life insurance is a type of temporary life insurance coverage that offers a death benefit. This coverage is typically a lower-cost option as the coverage is only temporary, and policies do not have a cash value or savings component. 

Whole life insurance is a type of permanent life insurance that covers the insured for a lifetime. Policies offer a death benefit, but also have a savings component that uses premiums to build cash value in an interest-bearing account. The cash value of a whole life policy can be borrowed against on a tax-free basis but will lower the death benefit until fully repaid. Whole life insurance premiums are much higher than term life policies due to the length of coverage and cash value savings.

What Happens If I Outlive My Term Life Insurance Policy? 

For most term policies, there are a few options available for those that outlive their term life insurance policies:

1. Renew (or extend) the policy: If you still need term life insurance coverage, you may be able to renew the policy or pay for coverage on a year-to-year basis. Some life insurance providers allow individuals to extend term policy, but prices usually increase, and another medical exam may be necessary.
2. Convert to a permanent policy: Many term policies allow the insured to convert the term policy into a permanent life insurance policy. This usually needs to be done while the term policy is in force, but there may be a period for conversion after expiration.
3. Allow the coverage to end: When a term policy expires, the coverage is no longer in force. Individuals who do nothing will no longer be covered and will no longer need to make premium payments for the policy. This is a good option if you feel that you no longer need the life insurance policy.

Can I Have More Than One Term Life Insurance Policy?

Yes. Sometimes having multiple policies gives you more flexibility in your coverage, adding more coverage or dropping policies as your life insurance needs change over time. This is known as “laddering” term policies and may be a good option if you expect your life insurance needs to increase or decrease.

When applying for an additional policy, you typically must disclose if you are covered by another policy. If you are applying for more life insurance coverage, and the total of your policies cover more than 20x or 30x your salary, you may be asked to give justification for this coverage amount.

Methodology

Many companies offer term life insurance policies, and it can be confusing to comb through the finer details. To create our list, we looked at company history, reputation, and the number of complaints they received. We also considered the types of term policies, riders, customer service, monthly premiums, exclusions, and any special features.