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If you're looking for life insurance, you've seen both whole and term policies offered. So, what is term life insurance? And how does it differ from whole life? Term life insurance is a type of protection that has set term lengths and pays out to your beneficiary if you die while your policy is active. In some circumstances, your life insurance may also offer a payout if you become permanently disabled and unable to work.
In the wake of the COVID-19 pandemic, we’re living in a world filled with strife that should give you pause. So, let’s take a closer look at term life coverage and how it works in 2024. Get to know some of the major players and compare quotes here so that you can protect your family, plan for the future, layer coverage, cover family members and much more.
Quick Look: The Best Term Life Insurance Companies
- Best for Those Under 50 Years Old: Wysh
- Best for Adjustable Coverage: Bestow
- Best for Those Under Age 64: Policygenius
- Best for Young Families: Ethos
- Best for People With Healthy Lifestyles: Ladder
- Best for Young Families: Fabric Life Insurance
- Best for Anybody on a Budget: Dayforward
Best Term Life Insurance Companies
When you’re searching for the best term life insurance for your family and/or budget
1. Best for Those Under 50 Years Old: Wysh
When you shop with Wysh, you’ll uncover flexible policy options with no medical exam. Answer a few health questions and work with the customer care team to learn what your options are so that you can protect yourself (and your family) as soon as possible.
Wysh’s policies make everything simpler for you, offering:
- Specialized customer service for all your life insurance questions
- Flexible benefits that can rise up to $2.5 million in value
- Terms can reach over 40 years
- Support for families after the policyholder passes
- A high-yield savings account for the present day
- Enrollment in less than 10 minutes
While there aren’t policies for those over 50 years of age, Wysh works well for first-time buyers, young policyholders or those who simply want to layer their existing coverage with more value. Some people purchase multiple term life policies that expire at different times, ensuring that there’s quite a bit of coverage without overspending. Parents can also look into Wysh to pick up a policy for their children that they can enhance or alter in the future.
- The platform’s focus level allows you to save money
- You can get the support you need, even when filing the claim
- While you can enroll quickly and get valuable coverage, you may need to pay more for what you want
- No coverage for those over 50
2. Best for Adjustable Coverage: Bestow Life Insurance
Bestow only offers term life insurance and you can choose from a short or long-term policy depending on your needs. You are able to receive your coverage immediately if you’re approved for a policy. Bestow also offers low rates and flexible cancellation policy to help you with this important decision.
- Flexible cancellation terms help you get in and out of coverage easily
- You can keep costs low
- The platform allows you to purchase coverage for the whole family
- You may be looking for far more valuable coverage
3. Best for Adjustable Coverage: Policygenius Life Insurance
While not an insurer itself, Policygenius is an insurance marketplace that allows you to compare and contrast a wide range of insurance products, including life insurance. Use their free tools to educate yourself on life insurance and calculate the amount of coverage you need. From there, easily compare and apply for your policy all in one place.
- You can access hundreds of carriers all in one place
- You can speak with their experts about the coverage you need
- There are several levels of coverage, policies and styles you can try
- Because this is just a marketplace, you may not find the level of service you prefer
4. Best for Those Under Age 64: Ethos Life Insurance
Offering both term and whole life (which can include guaranteed issue)products, Ethos helps you find life insurance backed by top providers. You can complete the entire process alone and online, or get help from a licensed and salaried agent.
- You can quickly qualify for coverage
- Speaking to licensed agents helps you get your questions answered
- You don’t need to worry about sales tactics
- The platform is all online, which may fly in the face of what some consumers want
5. Best for People With Healthy Lifestyles: Ladder Life Insurance
- securely through Ladder Life Insurance's websiteBest For:Adjustable coverage
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers – for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products. Coverage amounts vary by state.
Ladder offers term life insurance products issued by multiple highly rated insurers for people between the ages of 20 and 60. Its life insurance policies also offer a wide range of coverage options, ranging from $100,000 to $8 million.
- You can choose the partner that works best for you
- You can take out quite a lot of coverage
- Families and singles can use this platform
- While limits are high, rates could also be quite high
6. Best for Young Families: Fabric Life Insurance
Term life insurance products often seem to be lacking, and larger insurance carriers advertise as if you need to buy more and spend more. With Fabric Life Insurance, you can create the policy you need online. Young families or singles can purchase 10, 15, 20, 25 or even 30 years of term coverage that can start as low as $100,000 and reach as high as $5 million.
With this sort of coverage backing you, your family is protected should something happen to you. Couples can purchase protection for each other, and children can even be insured to provide the family with peace of mind.
Most applicants aren’t subject to a medical exam, and you can even create a digital will to go along with your policy. Download the Fabric app to manage your policy and get some free resources for parents and get the whole thing done in a short period of time.
- You can apply online very quickly
- The platform allows you to receive up to $5 million in coverage, far more than the competition
- The extra resources provided by Fabric make it a lifestyle support module for young families and singles
- Not available in New York or Montana
- Lump sum payments may not be ideal for your family situation
7. Best for Anyone on a Budget: Dayforward
Dayforward is one of the more unique insurance products on the market today. The plans designed by Dayforward offer life insurance that guarantees your monthly paycheck for long periods of time should you pass away unexpectedly.
Available in over 35 states, Dayforward allows you to:
- Get coverage on a budget
- Speak to a licensed professional
- Set up payment plans that will last until your youngest child turns 18, 21 or even 26
- Buy coverage as soon as possible
Using Dayforward, you can set up a steady stream of income for your family when you die, or you and your partner can purchase comparable policies. Lump sums don’t work for everyone, and the surety of a monthly income is easy to uncover with Dayforward.
- Payout plans are customizable
- You can speak with experts who can answer your questions and tailor a policy to your needs
- Costs are kept as low as possible
- Some families may want a lump sum payment given their particular situation
What is Term Life Insurance?
Term life insurance, by definition, is a type of insurance policy that guarantees an agreed-upon payout of a death benefit to named beneficiaries in the event that the policyholder passes away during the term of the life insurance policy.
- Terms typically last from 1 to 30 years
- Term life insurance is often sold at a less expensive rate than whole life insurance
- Unlike whole life insurance, term life usually does not offer a cash value benefit while the policyholder is alive
How Does Coverage Work?
When you apply for a term life plan, you’ll choose an initial term for your policy. Your term is the length of time that your insurance policy is active. For example, if you choose a policy with a 20-year term, it means that your policy will be active for 20 years from the first month you pay for your insurance.
You’ll also name a beneficiary on your policy. Your beneficiary might be your children, your spouse, other members of your family, a business partner
If you don’t die during your policy’s term, your insurance policy expires and you don’t receive any type of benefit.
Your beneficiaries can use your death benefit in any way they like. There are no restrictions on what they can spend it on. Most beneficiaries use the death benefit for living expenses, debt and funeral expenses. If you have more than 1 beneficiary, you should specify how you would like your death benefit divided in your will.
Whole Life vs. Term Life
There are 2 major types of life insurance: whole life and term life. Let’s take a look at a few of the differences between these types.
- Whole life lasts for the duration of your life; term life has set terms, or the length of time that your policy is active.
- Whole life insurance has a guaranteed death benefit. Term life coverage does not; your beneficiaries will only be paid out if your policy is still active when you pass.
- Whole life policies include a cash benefit as well as a death benefit. You can only access the cash benefit while you are alive; a death benefit is paid out to your beneficiaries upon your passing.
- Whole life insurance typically has more expensive premiums than term life insurance.
- Term life may be easier to get online or more quickly; some policies are available as no medical exam life insurance coverage.
Whole Life Insurance
Whole life insurance guarantees a death benefit for your beneficiaries. Unlike a term life policy, whole life policies don’t have a term. It doesn’t matter when you die, your beneficiaries will receive your benefit as long as the premium is paid.
In addition to a death benefit, whole life insurance policies also include a cash benefit portion. Every month, a small percentage of your premium goes into a cash value that builds interest over time. You can borrow against it or take it out as a low-interest loan. The cash benefit portion of your policy can help you recapture some of the money you spend on premiums. You can only access this benefit while you’re alive. If you die, your beneficiaries don’t receive your cash benefit account — only your death benefit.
The downside of these policies is that whole life insurance policies are much more expensive than term life policies. Many whole life policyholders default on their policies because they can’t keep up with the payments.
Term Life Insurance
Term life insurance policies have a set term during which your policy is active. Unlike whole life insurance, your death benefit isn’t guaranteed with a term life insurance policy. Term policies also don’t have cash benefit portions. However, they are much more affordable and easier to get online. If you’re looking for cheap life insurance, term life insurance is a good place to start.
Who Needs Term Life Insurance?
Not sure if you need a life insurance policy? Let’s take a look at a few reasons to get a term life insurance policy.
These types of policies may be more affordable. You can find term life insurance for as little as $20 per month from many companies.
Term life insurance policies have no limit on death benefit usage. Unlike some types of insurance (like mortgage payment insurance) there are no limits on how your beneficiaries use your death benefit with a term policy. Your family members can use your benefits for everything from paying off credit card debt to investing for the future.
Now that you understand how term life insurance works, let’s take a look at a few of our top picks that offer term policies.
Term life is often the first (and most budget friendly) choice for millions of Americans. In fact, most people buy term life policies because they are easy to manage and fit into their budget.
Protect Your Family with Affordable Coverage
Buying term life insurance doesn’t need to be complicated. The best way to ensure that you’re getting the protection that you need is to fully read your policy’s terms before you enroll. Don’t be afraid to ask your insurance representative any questions you have about your policy, your premium and what your beneficiaries will receive if you die.
Frequently Asked Questions
What are the advantages of term life insurance?
A term life policy allows you to purchase coverage at a guaranteed premium for a limited amount of time. This structure makes term life an affordable choice to protect your family if you have a financial commitment that won’t last forever, like a mortgage or the cost of raising kids. A 20-year term life insurance policy is generally the most popular life insurance policy purchased to protect loved ones if the unexpected happens. Get a quote from top providers.
What are the advantages of whole life insurance?
Whole life insurance, along with universal life insurance and some other variants, is designed to provide coverage for your entire life. This differs from a term policy that offers guaranteed premiums for a limited time. Permanent life insurance has a savings or investment element that helps the policy to build cash value, making it an asset that can be borrowed against or even sold if you no longer need the policy.
How much life insurance do I need?
Many in the industry recommend that you carry 8-12 times your annual income in life insurance coverage. A more granular approach can be beneficial, however, and accounting for debt and ongoing financial commitments in more detail when choosing a coverage amount can better provide for your family than an arbitrary multiple of earnings. Get a customized quote for the best policy.
Benzinga crafted a specific methodology to rank life insurance. To see a comprehensive breakdown of our methodology, please visit our Life Insurance Methodology page.
About Sarah Horvath
Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.