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Types of Term Life Insurance

At Ansay & Associates, our team of experts get asked all the time, “What is term life insurance?” Like other life insurance products, term life insurance leverages your premium payments into a death benefit that pays out to your heirs tax free and without passing through probate. One of the big features of term life insurance is that it is less expensive than other life insurance policies because the coverage is set for a temporary amount of time, usually for a period of 10 – 30 years. The lower premium cost allows you to put your income towards building other, long-term assets, while ensuring your family is protected if you were to die in your prime income earning years. Term insurance rates are largely determined by the age bracket you fall in, and the premium increases as you grow older. This is why term life insurance is ideal for people in their prime.

Some helpful things to consider when deciding the right amount of death benefit include:

Income Replacement

Consider how many years you are going to keep working and how much income would be lost if you passed today. Don’t forget to factor in the cost of inflation as well.


Student loans, credit cards, and mortgages are usually the big ones to include here; a term life insurance can be used to eliminate some or all of these debts.

Ability to Leverage

Depending on your health and the length of a policy, your term life insurance rates will allow you to leverage small premiums into large death benefits.

Price Breaks

Make sure to look at several term life insurance quotes before making a final decision. Most term policies have price breaks (a better leveraged premium) at certain death benefit levels – usually round numbers like $100,000, $250,000, and $500,000.

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Additional Benefits and Coverages

Most term life insurance policies are straight forward, but some offer additional benefits and coverages you may want to consider:

Guaranteed Renewable

This feature allows you to lock in your term life insurance rating (based on your overall health). You will have the option to renew your term life policy, even if you have developed health conditions that might lower your rating.

Accidental Death & Dismemberment

This policy add-on is available for most term life insurance policies, costs relatively little, and pays out extra if you pass away in what is deemed a qualifying accident.

Term Conversion

This is a feature that allows you to convert all or some of your term insurance into a whole life (permanent) insurance. Your premium will match whatever a whole life at your selected death benefit would be, so the cost goes up, but you are able to retain a portion of your insurance for the remainder of your life.

Benefits of Term Life Insurance

Heaven forbid, but if you were to suddenly die, term life insurance ensures that your family is protected from loss of income and against debt obligations. This option is typically the least expensive and gives you the best leveraged death benefit for your premium payment. Not only is your family protected if you were to suddenly be cut down in the prime of life, but most policies will have features that allow you to hold onto your insurance for the rest of your life.

Term vs Whole Life Insurance

Term life insurance and whole life insurance have similar functions, but very different features:


Cash Value

Term life insurance does not accrue any cash value.



Whole life premiums are going to be higher than term precisely because these policies accrue cash value through guaranteed dividends or non-guaranteed investments. The lack of an accrued cash value allows for term life insurance quotes to be significantly lower despite the larger death benefits.


Policy Length

Term life insurance is available for a set term (period of time), and whole life (as long as premium payments are made or cash value continues growing) is meant to last until the insured’s death.

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Frequently Asked Questions

Answers to Frequently Asked Term Life Insurance Questions

What is Term Life Insurance?

Term life insurance is a low-cost way to have the protection of a death benefit in the event of an untimely death. These policies have larger death benefits, no cash accrual, and expire at the end of their term or upon death of the insured – whichever comes first.

How does Term Life Insurance work?

A term life insurance policy leverages a premium payment, turning it into a death benefit for a set amount of time (10 – 30 years).

What is the difference between Term and Whole Life Insurance?

Term life insurance provides a death benefit if the insured dies within the set term vs. whole life insurance, which accrues cash value during the life of the policy and (as long as premium payments or cash value are maintained) is in place until the death of the insured – no matter when that might be.

How much Term Life Insurance do I need?

The amount of coverage you need from term life insurance depends on a variety of factors. You will want to start by considering the income you may need to replace for your dependents and debt obligations that would remain in the event of your death.

Is Term Life Insurance worth it?

Term life insurance is one of the most cost-effective ways to protect your family from the financial challenges of a premature death.

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Whether you are married or single, have children or not, chances are that you want to protect your loved ones from undue financial burden at your death through term life insurance. Ansay & Associates is ready and available with expert advice and competitive quotes to make sure your loved ones are protected in the event of tragedy.

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