Best term life insurance companies of January 2024 (2024)

If you need short-term financial protection for your family, term life insurance can make sense over more complex, costlier options such as whole life insurance. This flexible policy type can cover important expenses and financial goals if you pass away while insured. But to find the best term life insurance, you’ll need to consider factors such as the cost, policy features and insurance company’s reputation.

Our picks at a glance

Why do you need term life insurance?

• To cover your final expenses: The coverage can help your loved ones pay for your funeral service, burial or cremation; estate-related expenses; and medical debt.
• To get funds for important goals: Your policy’s death benefit can go toward goals such as paying off the mortgage, leaving an inheritance or covering your children’s college.
• To enjoy flexible coverage: You can pick the term length, benefit amount and policy features based on your family’s needs.
• To have budget-friendly premiums: Term life coverage is usually a more economical choice than a comparable permanent life insurance policy since it lasts for a set number of years and doesn’t include a cash value component.

What is term life insurance?

Term life insurance is a policy that pays a death benefit to your chosen beneficiaries if you pass away during the coverage period, which usually ranges from one to 30 years. Most often, you’ll have a level term policy with a benefit amount and premium payments that don’t change during the term. However, there are also decreasing and increasing term policies that lower or raise the benefit amount over time, as well as annual renewable term policies that provide coverage for one year at a time.

If you keep up with your premiums and pass away during the term, your beneficiaries will receive the payout, which usually isn’t taxed. If you outlive the policy, your beneficiaries won’t receive any of the death benefit, and you would only get some of your premiums back if you have a return of premium rider. Plus, unlike with permanent life insurance, there is no cash value to utilize during your lifetime.

This temporary life insurance option is often renewable at the end of the term, though your premiums typically rise. Additionally, the insurer may offer a conversion option for switching to a permanent policy, usually within a specific time frame. Although a medical exam can be part of the initial application process, you usually won’t need another one to convert or renew the policy.

What is covered with term life insurance?

While you should check your policy for details, term life insurance coverage applies to most accidental and natural deaths. For example, if you pass away from an illness or a car accident, your beneficiaries should receive the payout. It will also cover if you simply pass away from old age.

Insurers often cover murders and suicides too, but there are rules. Although manslaughter and homicide are common inclusions, the circ*mstances around the death are important, and the insurer will consider whether beneficiaries were involved. If the insured passes due to suicide, the coverage usually only applies if a waiting period — often two years — has passed.

What’s not covered with term life insurance?

Term life insurance normally has exclusions outlined in the policy’s terms. For example, the insurance company may not provide a payout if you weren’t honest on your application about your health or other details affecting your eligibility. The insurer could question this information for claims made during a contestability period that usually runs up to two years after the policy takes effect.

Examples of other situations that term policies may not cover include:

• Deaths resulting from substance abuse or illegal activities
• Murder-related deaths associated with the beneficiaries
• Suicide-related deaths before the common two-year waiting period ends
• Deaths resulting from participating in risky activities, such as scuba diving or flying private planes
• Deaths occurring abroad (in certain situations)

Pros and cons of term life insurance

Pros explained

• Straightforward coverage: This life insurance option offers simplicity with a benefit amount payable only over a set term and no cash value to demystify.
• Cheaper than permanent policies: You’ll usually pay significantly less for term life coverage than permanent options, including whole life or universal life insurance. The lack of cash value also contributes to lower costs.
• Flexible terms: Whether you want yearly renewable coverage or a 30-year term, there are options to fit your financial goals. If your needs change, it’s also usually straightforward to cancel the term life policy before the term expires.
• Policy add-on options: Insurers often offer add-ons that pay out money (accelerated death benefit or living benefits rider) or pause premiums (waiver of premium rider) if you face a critical illness or disability. Another add-on (return of premium rider) lets you get back some of your premiums upon the term’s expiration.

Cons explained

• No accumulation of cash value: Your term life insurance premiums don’t go toward building a cash value that you might access via loans or withdrawals while you’re alive.
• No permanent coverage: Although you could renew the policy, your coverage otherwise expires after the specified term. If you develop serious health issues, you might also have trouble qualifying for a new policy.
• Potential premium increases: Your insurer usually charges higher premiums whenever you renew your policy since you are older and more likely to face health issues. Most term life policies will renew on an annual basis after the initial coverage term ends, which means these increases could occur every year. In other words, your premiums aren’t fixed — or level — after the initial policy term.
• Lower age limit than permanent policies: The cut-off age for applying for a new term life insurance policy is typically around age 80. This compares to an age limit of 85 or even 90 for a new permanent policy.

How much is term life insurance?

How much you pay for term life insurance depends on several factors, including your age, your gender, the amount of coverage and the length of the policy term. The tables below show the average monthly rates for 10-, 20- and 30-year policies with $250,000, $500,000 and $1 million of coverage.

Average cost of 10-year term life insurance

Average cost of 20-year term life insurance

Average cost of 30-year term life insurance

What affects term life insurance rates?

When determining your premiums, the life insurance company considers several factors related to your chosen policy, life expectancy and risk level. You have control over some of these, so you can take steps to get the best term life insurance rates. Common factors influencing your term life premiums include:

• Coverage amount
• Term length
• Optional riders
• Medical exam requirements (e.g., opting for no-medical-exam policies like simplified issue or guaranteed issue will cost more)
• Age
• Gender
• Nicotine use
• Current health status
• Family health background
• Type of job
• Hobbies
• Financial and criminal histories

How to find the best term life insurance for you

When looking for the best term life insurance, first consider how much coverage you need. This includes choosing a policy with a sufficient death benefit after accounting for any existing life insurance coverage (like a group life policy through your employer), financial responsibilities and assets you have. Additionally, think about how long you’ll need the coverage and whether any riders make sense for your situation.

The right term life insurance company will have affordable premiums. Checking rates through several insurers and looking into discounts for making annual payments, opting for certain death benefit amounts and bundling multiple policies together will help. Don’t forget to consider whether the insurer offers a renewal guarantee and a convertibility feature, if you may be interested in permanent life coverage in the future.

Finally, research the life insurance provider’s reputation and stability. The National Association of Insurance Commissioners offers a customer complaint index that rates how many complaints an insurer receives in relation to its size, and you can check the Better Business Bureau for an insurer’s accreditation, rating and customer reviews. Fitch, Standard & Poor’s and AM Best are credit agencies you can check to verify an insurer’s financial strength. This information provides confidence that the company can pay out life insurance claims.

Methodology

To find the best term life insurance companies, we started by examining dozens of leading insurers and then narrowed it down to the top-rated 20 companies and policies.

For each company, we analyzed 12 crucial categories, leveraging financial strength ratings from credit agency AM Best, complaint data from the National Association of Insurance Commissioners (NAIC) and study data from customer-research firm J.D. Power.

Overall, we worked through over 1,600 data points to identify winning companies. The following sections describe the category we scored and the weight we gave that category in our scoring model.

Average term life insurance rates (35%)

We calculated the average annual rate for a term life insurance policy for nonsmoking 30- and 40-year-old females and males in excellent health living in California based on quotes for term lengths of 10, 20 and 30 years and death benefits of $250,000, $500,000, $1 million and $2 million.

J.D. Power score (15%)

J.D. Power scores insurance providers based on five factors that are a key part of the customer experience: communication, interaction, price, product offerings and statements. We include J.D. Power ratings in our scores because they help you gauge what an insurer’s typical customer experience is like.

Online quotes available (10%)

Since applying for life insurance can be complicated, some insurers require you to work directly with an agent throughout the whole process, including for getting an initial quote. Others offer basic quotes online so you can get a feel for pricing upfront. Insurers that offered online quotes received higher scores than those that didn’t.

AM Best (7%)

AM Best is a well-respected independent credit rating agency that evaluates insurance companies’ financial strength. By analyzing insurers’ balance sheets, risk management, operating performance and other factors, AM Best assigns a financial strength rating (FSR) based on the insurers’ abilities to pay out on claims and cover other obligations.

Accelerated death benefit rider (6%)

Accelerated death benefit, or living benefits, riders can help you cover expenses after being diagnosed with a terminal illness by paying a portion of the death benefit to you directly while you’re still living. The companies that offer these types of riders received higher scores than those that don’t.

NAIC 3-year average index (5%)

The National Association of Insurance Commissioners (NAIC) calculates an index for insurance companies based on the company’s share of premiums and complaints filed with the NAIC. An index of 1.00 indicates the insurer received the expected number of complaints for a company of its size. An index below 1.00 means the company received fewer complaints than expected for a company of its size and vice versa. We took the average index for each company from the past three years.

No-medical-exam option available (5%)

Part of the hassle of applying for life insurance involves taking a medical exam so underwriters can properly assess your health and risk and assign a rate accordingly. Some insurers offer no-exam options like simplified issue and guaranteed issue life insurance so you can skip the exam altogether. However, these policies will likely be more expensive. We looked to see which companies offered this option.

Conversion option available (4%)

Many insurance companies allow you to convert a term life policy into a permanent one, like whole life or universal life, without requiring you to undergo underwriting again. Having a convertible policy can be beneficial if your financial needs and goals change. Insurance companies that offer term life conversion received higher scores.

Renewability feature available (4%)

When you reach the end of your policy term, some insurance companies allow you to renew your coverage without having to take a medical exam. Although your premiums will likely be higher after the initial term, this can be a great option if you still need coverage but won’t qualify for a new policy. We looked to see which insurers include a renewability feature in their term life policies.

Minimum and maximum death benefit options (3%)

Most insurers set a minimum death benefit (or face value) you are required to purchase. They also won’t typically provide coverage over a specific threshold. Insurers that had a wider range of death benefit options between the minimum and maximum death benefit amounts received higher scores since this indicates greater flexibility when it comes to choosing a coverage amount appropriate for your needs.

Minimum and maximum issue age (3%)

You usually can’t apply for life insurance if you’re younger or older than the insurance company’s age limits. Companies that had lower minimum issue ages, such as 16 or 18, and higher maximum issue ages, such as 75 or 80, received higher scores.

Term length options (3%)

One benefit of choosing term life insurance is customization: Most insurers offer a handful of term length options, usually ranging from 10 to 40 years, so you can choose the best one for your needs. We looked to see how many term length options were available for each policy, giving higher scores to the ones with more choices.

What didn’t make the cut

Of the 20 life insurance companies and policies we analyzed for our final rankings, 10 did not win a category. Of those 10, six had scores above 4 stars: Midland National’s Premier Term, Lincoln Financial’s TermAccel Level Term, Ameritas’s Value Plus Term, SBLI’s Term Life, Mutual of Omaha’s Term Life Answers and USAA’s Level Term. Though these companies scored well, they didn’t stand out in any particular category to win. The remaining four, American General’s Select-a-Term, Penn Mutual’s Term Life, Ladder’s Term Life and John Hanco*ck’s Protection Term 20, scored below 4 stars.