Home Life insurance Types of life insurance Understanding the six Different Types of Term Life Insurance Policies Understanding the six Different Types of Term Life Insurance Policies There are many types of term life insurance, but level term life insurance is the best option for most people because it offers robust coverage at the best price. Written by: Nupur Gambhir Nupur Gambhir Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service. | Reviewed by: Laura Longero Laura Longero Laura Longero is a content strategist and communications leader with more than 15 years of experience in content development in journalism, marketing and communications for start-ups to global companies. She started her career as a reporter and editor and honed her journalistic skills at the USA Today Network, working in several roles, as well as managing content and writing at MoneyGeek and XYZ Media. | Updated on July 28, 2023 Why you should trust Insure.com Quality Verified At Insure.com, we are committed to providing honest and reliable information so that you can make the best financial decisions for you and your family. All of our content is written and reviewed by industry professionals and insurance experts. We maintain strict editorial independence from insurance companies to maintain editorial integrity, so our recommendations are unbiased and are based on a comprehensive list of criteria. Term life insurance is a type of life insurance that lasts for a set period of time, or the term. The term can last anywhere from five to 40 years. The concept is simple; if you’ve chosen a term life policy of 20 years, and pay the premium, your beneficiaries receive your death benefit if you die during that time.While term life is generally more affordable than whole life insurance, some term policies still cost more than others. However, Loretta Worters, vice president of media relations at the Insurance Information Institute, or III, says most people buy level term — which is the most straightforward and affordable type of term life insurance.Let’s dig deeper into six different types of term life plans:Level term life insuranceThe most common and popular type of term life insurance, level term life insurance, provides a set premium and death benefit for the duration of the policy. Level term life insurance is the easiest to manage because you don’t have to worry about making any major changes to the policy during its term. You can also rest assured that if you die unexpectedly, your beneficiaries will get the amount of coverage you signed up for — as long as you paid the policy’s premiums.Level term life insurance policies are the most affordable and provide the most straightforward security.Return of premium term life insuranceWith a return of premium policy, the insurer returns the premiums at the end of the term. Sounds nice, right? But there’s a catch: Insurers charge much higher premiums for these policies. Additionally, you might not get all of the money back.“Some policies will return the base premium but not the extra premium (for the return benefit), and others will return both,” Worters says.Instead, consider getting term and investing the difference. Decreasing term life insuranceDecreasing term life insurance is a renewable policy in which the coverage decreases over time, but the premiums remain constant. “With a term life insurance policy with a decreasing term, coverage decreases,” says Mark Hill, assistant vice president at MassMutual. “These types of policies are generally used to cover loans.” This policy may interest you if you believe you’ll be better off financially in the future or will have fewer debts, but a level term policy will provide more coverage for a similar amount. QuickTake Types of life insurance What is term life insurance and how does it work? No-medical-exam life insurance: What it is and how it works Whole life insurance: What it is and how it works What seniors need to know about buying life insurance The limitations of group life insurance What is simplified issue life insurance? Burial insurance: What it is and how it works What is variable universal life insurance? What is universal life insurance? 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The protection is the same, but the premiums increase.For instance, you may initially dish out $12 a month for your term life policy. Then, in five years, premiums jump to $16 per month.Modified insurance would appeal to someone who doesn’t have much money for insurance now, but likely will in the future — for example, people with kids or a new graduate who hasn’t landed their dream job yet.Convertible term life insuranceMost term life insurance policies can be converted to permanent coverage during the term period up to a certain age“This means that the policy’s owner has the right to change it into a permanent type of life insurance without additional evidence of insurability,” Worters said.If, at the end of your policy’s term, you find that you still need life insurance, converting your policy is a good option. Because you don’t have to prove evidence of insurability, you will not have to retake the medical exam, which may bar you from getting coverage at a certain age or if you developed certain medical conditions.Check if your policy is convertible with your provider before finalizing your policy.Which term life insurance is best for you?Level term life insurance is the best option for most people because it offers straightforward, affordable coverage. The coverage amount stays the same throughout the policy’s term, and the death benefit matches what you pay for. However, there’s no one-size-fits-all term life insurance policy and you should talk to an advisor or financial planner to get a policy that matches your specific needs.Most people opt for 10-, 15- or 20-year term policies. This coverage reflects the desired coverage level at the most reasonable cost. If you’re still alive at the end of the term, coverage ends unless you convert the policy or buy a new one.Once you have a game plan in place, make sure to compare companies. Rates vary for each insurer, so compare quotes and coverage. Check out Insure’s best life insurance companies to see who Insure.com’s editors recommend.– Charlene Arsenault contributed to this story. × Get Free Life Insurance Quotes Today! Zip Code Please enter valid zip Age Age 16 – 20 21 – 24 25 – 34 35 – 44 45 – 54 55 – 64 65+ Coverage Amount Coverage Amount $50,000 – $100,000 $100,000 – $200,000 $200,000 – $300,000 $400,000 – $500,000 $500,000 – $1,000,000 $1,000,000 – $2,000,000 $2,000,000 – $5,000,000 $5,000,000+ Coverage Type Coverage Type Whole Life Term Life Final Expense Not Sure Gender Gender Male Female Non-Binary Tobacco Use Yes No Compare Quotes Nupur GambhirManaging Editor | . .Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service. Related Articles How to buy life insurance after being diagnosed with cancer By Shivani Gite What is a life insurance beneficiary? By Laine Adley Life insurance riders: What they are and how they work By Laine Adley What is term life insurance and how does it work? By Nupur Gambhir How to make sure you have enough life insurance By Jeffrey Green Types of life insurance By Huma Naeem Get instant quotes now ! Please enter valid zip Get Quotes