Read our Term Life Insurance FAQs to help with the insurance shopping process.

Although there are many types of life insurance products being offered today, all of these products belong in one of two categories of life insurance: temporary life insurance or permanent life insurance.

Term life insurance is considered temporary because it is purchased in blocks of years known as a term. If the insured dies within the term of the policy, the death benefit is paid to the insured’s beneficiaries, if the insured dies outside of the policy term, the insurance company is not obligated to pay a death benefit.

Term life insurance is generally offered in terms of 5 to 30 years however, some companies are now offering 35 and 40-year policies. Term insurance is the most affordable type of life insurance because it is not permanent coverage and there is no cash component attached to the policy.

Since term life insurance rates consist only of the cost of life insurance and administrative fees, the rates are dramatically lower than permanent life insurance policies such as whole life or universal life insurance.

With term insurance being the simplest form of life insurance, you might assume there would be minimal questions about it. However, since there are many variations of term insurance policies and optional riders available, there are many frequently asked questions that should be addressed and in this article, we will address the most popular ones.

Term Life Insurance FAQs

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

What is the difference between whole life and term insurance?

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

Term life insurance provides coverage for a set period of time, between 10 and 30 years. It’s simple and affordable for many families and is often a good starting point for those who want to see how long they might need coverage.

Whole life insurance is more expensive, but lasts your entire lifetime, meaning you don’t ever have to worry about the insurance being canceled. In addition, it comes with an investment component that grows over time.

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

How long is term life insurance?

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

Term life insurance policies are generally offered in policy terms from 5 to 30 years. Lately, a handful of insurance companies began offering 35 and 40-year terms. If the insured person dies during the term of the policy, the designated beneficiary or beneficiaries will receive a cash benefit that is typically paid in a non-taxable lump sum.

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

What is Level Term Insurance?

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

Although there are several types of term life insurance policies, most people purchase “level term insurance” because the premium payments and death benefit remain the same (level) for the duration of the policy term.

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

What is Decreasing term life insurance?

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

Decreasing term life insurance, also known as credit life insurance is term life insurance that is typically purchased to cover a debt. The policy is purchased to cover the debt but the death benefit decreases as the debt decreases.

Although decreasing term life insurance used to be fairly popular because the rates were lower than level term, in today’s marketplace, the premium savings is not what it used to be so most people purchase level term insurance except when to policy is designated to cover a mortgage.

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

What happens when term life insurance expires?

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

When your policy reaches the end of its term, there are three things that can happen:

  1. If your policy has a conversion privilege, you can convert it to a permanent policy without the need for medical underwriting.
  2. Most companies will send you an offer to renew your policy as an annually renewable term. This means that your renewal will be based on your age at renewal and the policy will renew each year based on your age at renewal.
  3. If you elect to let your policy expire, there is nothing to do since your policy has no cash component attached.

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

What is convertible term life insurance?

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

Most term policies contain a “conversion privilege.” This conversion privilege provides for the insurance company to allow you to convert your term policy to a permanent policy like whole life or universal life offered by your term insurer. This is an important option because your new permanent policy, although more expensive, will be issued regardless of your health at the time of the conversion.

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

What is group term life insurance?

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

Group term life insurance is generally offered by employers, associations, or unions. These policies are typically guaranteed issue policies so the applicants do not have to prove insurability. Instead of the policy being rated on the individual, the policies are rated based on the make-up of the group. Generally, the group pays a portion or all of the premium for the employee or member which may be higher than individual term policies because of the guaranteed issue rating.

Group term is especially beneficial when an applicant has health or lifestyle issues that would ordinarily preclude them from getting coverage on their own. Additionally, many types of group term life insurance are convertible to permanent policies without proof of insurability.

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

What is Return of Premium term insurance?

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

Return of premium is generally added as a rider to an individual term life insurance policy and requires additional premium. With the return of premium (ROP) rider, if the insured outlives the term policy, the company will refund all premiums paid into the policy. Additionally, some companies will pay a prorated return of premium if you decide to cancel the policy near the expiration date.

Since the money received from the insurer is a return of after-tax money, the refund will be paid in a tax-exempt lump sum.

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

What is direct term life insurance?

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

Direct term life insurance is generally the same as individual term life insurance but rather than purchasing it through an agent or broker, the applicant deals directly with the insurance company (typically purchased online).

Although companies who offer direct term policies advertise that their life insurance can be purchased quicker and cheaper, the products they offer are usually “cookie-cutter” policies and fewer people will medically qualify for coverage. Additionally, the savings, if any, may not justify giving up the advice of an experienced and reputable independent insurance agent who represents many of the highly-rated insurance providers.

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

How will I know how much term insurance to purchase?

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

The amount of insurance you will need is based on what financial risks you want to cover (living expenses, college tuition for children, mortgage payoff, etc) and what your budget can comfortably afford. Since most companies offer death benefits from $25,000 to $5 million, insurance shoppers should use an “insurance needs analysis” that is offered by most agents or you can complete your own using a free online program.

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

What is no-exam term life insurance?

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

Although the best term insurance rates are typically offered with fully-underwritten insurance policies, many companies today offer no-exam life insurance for individuals who prefer not to have a paramedical exam. Insurance companies that offer no-exam term life insurance will use other medical data provided by the Medical Information Bureau (MIB), Prescription Database, and questions on the application to assess your medical risk to the company.

Whereas in the past, no-exam life insurance was priced higher than fully-underwritten life insurance, today’s technology allows the insurance companies to offer similar rates for both types of policies.

Since the no-exam life insurance policy costs the insurance company less to underwrite and the need for a medical exam is eliminated, healthy applicants can generally purchase term life insurance at affordable rates and have the policy issued in a matter of days.

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

In Conclusion

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

Although term life insurance is the simplest form of insurance to purchase, there are many more FAQs to be addressed besides the ones listed here. We do believe, however, that after reviewing these FAQs, anyone considering purchasing term life insurance will have a better understanding of this life insurance product.

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).

For more information about term life insurance and to get a free and confidential quote, you can start by using our instant quote calculator and then contact us if you need any further information or if you’d like to proceed with an application. We’re here to help! (631) 391-2993

Whole Life Insurance

Whole Life Insurance is permanent insurance, designed to cover you from the day the policy is issued until the day you die. There are fixed premiums and a fixed death benefit with this type of life insurance. Whole Life also has a cash-value savings vehicle that can be accessed for any reason via policy loans and cash withdrawals (partial surrenders).