Updated August 2026 · Reviewed by the CoverageCo team
Term life insurance covers you for a fixed number of years — commonly 10, 20, or 30 — and pays a death benefit to your beneficiaries if you die during that term. If you outlive the term, coverage ends and there's no payout. It has no cash value, which is exactly why it costs so much less than permanent insurance.
Key takeaways
- You choose a term length and a benefit amount; premiums are typically level for the whole term.
- No cash value and no payout if you outlive it — that's what makes it inexpensive.
- Match the term to the obligation: until the mortgage is paid, or the youngest child finishes school.
- Ask whether the policy is convertible before you buy — that option is hard to add later.
How a term policy actually works
You apply for a specific benefit amount over a specific term. The insurer underwrites you — reviewing age, health, medical history, and usually tobacco use — and sets your premium.
Once issued, premiums on a level term policy stay the same for the whole term. Your rate at 35 on a 20-year policy is the same at 54.
If you die during the term, your beneficiaries receive the death benefit, generally income-tax-free. If the term ends while you're alive, coverage stops.
Choosing the term length
The useful question isn't "how long should a policy be" — it's "how long would my family actually need this money?"
| Term | Typically matches |
|---|---|
| 10 year | A short remaining obligation, or bridging to retirement |
| 20 year | Young children through to independence; a mid-term mortgage |
| 30 year | A new 30-year mortgage; very young children; a long earning runway |
What drives what you pay
Term life pricing is individually underwritten, so no honest page can quote you a rate. What it can do is tell you what moves the number:
- Age — the single largest factor, and it only moves one direction.
- Health — current conditions, medical history, and how well anything is managed.
- Tobacco or nicotine use, which typically has a substantial effect.
- Term length and benefit amount.
- Family medical history, and sometimes driving record or risky occupations and hobbies.
The convertibility question
Many term policies include a conversion option: the right to convert some or all of the coverage into a permanent policy later, without new medical underwriting.
That option matters more than it sounds. If your health changes during the term, conversion may be the only route to permanent coverage you'd still qualify for.
Conversion rules vary — how long the option lasts, which permanent products you can convert into. Ask before you buy, because it's effectively impossible to add afterward.
Getting an actual number
Because pricing is underwritten individually, the only real answer comes from a quote based on your age and health.
Rates for the same person can vary meaningfully between insurers, since each carrier underwrites differently. An independent agent can compare several at once rather than you applying one at a time — which also avoids a declination landing on your record.
It costs nothing to find out, and there's no obligation.
Common questions
What happens if I outlive my term life policy?
Coverage ends and there's no payout. Some policies can be renewed at a higher premium based on your age, and many can be converted to permanent coverage during a set window. If you still need coverage, a new policy would be underwritten at your current age and health.
Does term life insurance have cash value?
No. Term policies provide a death benefit only, which is the main reason they cost far less than permanent policies with the same benefit amount.
Can I have more than one term life policy?
Yes. Some people layer policies — for example a 30-year policy for the mortgage and an additional 20-year policy covering the years their children are dependents — so coverage steps down as obligations end.
Is the death benefit taxable?
Life insurance death benefits are generally received income-tax-free by beneficiaries, though estate tax situations can differ. Consult a tax professional about your circumstances.