If you’re asking yourself whether to apply for life insurance coverage, ask yourself this question: Do you want to financially protect your loved ones and help minimize the financial impact they’ll experience if you die unexpectedly? If the answer is “yes,” then term life insurance can be a solid, affordable way of achieving that goal.

Of course, there are some situations in which term life insurance may not be worth it — so let’s take a look at what term life insurance is, how to figure out what coverage you need and how much you might pay in life insurance premiums, and whether term life insurance is worth it for you.

What exactly is term life insurance and how does it work?

Term life insurance is a simple, affordable type of life insurance. It insures your life for a period of time that you choose from the coverage lengths available in your policy. You can choose a term length to last until your mortgage is paid in full or your kids are adults, to avoid leaving behind financial obligations that could burden your family if you were to die during the coverage term.

Most insurers offer term lengths of 10, 15, 20, and 30 years. Depending upon your policy’s provisions, you make monthly or yearly payments for the duration of the policy term. If you were to die during that time, the policy would pay a death benefit to your beneficiaries.

Life insurance beneficiaries are people who will receive the payout from a life insurance policy if you were to die. The proceeds from the payout can be used to help pay for financial needs – those that come with death, such as funeral arrangements and other end-of-life expenses, along with day-to-day bills like the mortgage and child care.

You can name several people as primary beneficiaries, outlining the percentage of the policy payout each would be given. You can also name a contingent beneficiary, who could receive the death benefit if something happened to the primary beneficiary.

For some, naming two beneficiaries — say, a partner and a parent — may make sense, especially if both could face financial hardship if you were no longer around. For others, one beneficiary, with a contingent beneficiary named, may make the most sense. That’s what Haven Life customers most commonly do.

If you are young and have many working years ahead of you, then you may want to consider a 30-year long-term policy. The same goes if you just signed up for a 30-year mortgage. If you have young kids and have paid on your mortgage for several years, then a 20-year term life insurance policy might be a better fit.

Determining which term length you need is actually very easy. You can use an online life insurance calculator to receive a recommendation on a coverage amount and term length that may best fit your financial situation.

Who may need term life insurance?

If you have loved ones who are financially dependent on you — like partners, children, siblings or parents — then buying life insurance is probably a smart idea. The payout from a life insurance policy can provide a financial safety net that can help a beneficiary cover the expenses that would otherwise have been covered by your income. This may include mortgage payments, child care costs and the other day-to-day bills that come with adulthood.

Even if you don’t have people in your life who are dependent on your income, life insurance can still be a good way to protect your family from a difficult financial situation. The financial cushion from a life insurance policy can help cover funeral expenses or help pay your outstanding debts, if any.

If you’re still in your 20s or living the single life with no spouse or kids, a term life insurance policy could help protect someone who cosigned a loan with you (such as your parents). If the unexpected were to happen, the proceeds of a life insurance policy could help cosigners pay loans that you leave behind, such as a cosigned student loans or mortgage.

In short, term life insurance is an affordable way to financially protect the people you love most. The death benefit from a life insurance policy could help:

  • Replace lost income and pay living expenses, like rent or a mortgage
  • Pay debts you leave behind
  • Provide for your kids’ care if you are a stay-at-home parent
  • Pay for burial, estate taxes and other final expenses
  • Fund college costs
  • Pay unpaid medical bills or taxes
  • Create an inheritance

For a small amount of money, you can support your family’s financial well-being even after your death — and if you need another incentive to become a life insurance policyholder, remember that the death benefit your chosen beneficiaries will receive is typically tax-free.

What does term life insurance cost?

The cost of a term life insurance policy will depend on your age and health as well as the term length and coverage amount you choose. The following are sample quotes for a Haven Term policy, issued by MassMutual, for people in excellent health:

Age   Coverage      
$250,000 $500,000 $750,000 $1,000,000
20 Male $16.77 $22.05 $30.07 $38.09
Female $14.38 $19.03 $25.55 $32.07
25 Male $16.99 $22.48 $30.72 $38.96
Female $14.58 $19.03 $25.55 $32.07
30 Male $17.43 $22.48 $30.72 $38.96
Female $14.99 $19.46 $26.19 $32.92
35 Male $18.06 $23.34 $32.01 $40.67
Female $15.37 $20.32 $27.49 $34.65
40 Male $24.12 $32.38 $45.57 $58.77
Female $19.91 $28.07 $39.11 $50.15
45 Male $38.16 $56.07 $81.10 $106.13
Female $29.64 $43.15 $61.72 $80.30
Source: Haven Life

What are the alternatives to term life insurance?

Crossing your fingers? Wearing a crash helmet, even when it’s socially awkward? Well, no. If you have dependents, you most likely need life insurance — because stuff happens, and you need to be prepared for it, especially if that stuff (and by “stuff” we mean your unexpected death) would impact the people you care about the most.

That said, one alternative to term life insurance is permanent life insurance. The one of the most common types of permanent policies is whole life insurance. Here’s the big difference between term and permanent life insurance: term insurance covers you for a predetermined number of years (a “term,” if you will) and a permanent life insurance policy covers you for the rest of your life.

The primary purpose for purchasing life insurance, whether it be term or permanent coverage, is the need for the death benefit to protect those you love. With a whole life insurance policy, you pay for lifetime coverage. The policy also includes a cash accumulation feature that accumulates over time. Taking out loans from the cash value built up in your life insurance policy can be a way to help pay expenses such as retirement costs or your children’s college costs. (It’s important to know that accessing your policy’s cash value, through borrowing or partial surrenders, reduces its cash value and the death benefit. It also increases the chance the policy will lapse, and may result in a tax liability if the policy terminates before your death). And, some whole life insurance policies (those that are “participating”) have the potential to earn dividends (however, dividends are not guaranteed).

With term life insurance, you decide how long you anticipate needing the coverage — until the mortgage is paid off, until the kids graduate from college, until you retire, etc. — and select a term that corresponds to that length of time. If you die before the coverage term ends, the death benefit is paid to your beneficiaries.

The other big difference between the two types of life insurance is price. Whole life insurance is significantly more expensive than term; in fact, the annual premiums are often five times more expensive for the same dollar amount of coverage. Whole life insurance is also a more complicated product and requires an insurance agent to help you put your policy into place (and you might want to consult a financial planner as well). Term life insurance is simpler, more affordable, and doesn’t always require an insurance agent. You can apply for some term life insurance policies online, in a matter of minutes.

Term versus permanent life insurance: Which is right for you?

When it comes to shopping for life insurance, the decision on whether to get a term or permanent policy really comes down to your personal preferences and situation.

Term life insurance might be a good choice if you:

  • Are looking for an affordable way to financially protect your family
  • Are seeking coverage to help your partner pay the day-to-day bills if you were no longer around
  • Need coverage until your children are financially independent
  • Need a policy to help pay specific cosigned debts (like a mortgage or student loans)
  • Have, or plan to have, substantial money saved for retirement

Permanent life insurance might be a good choice if you:

  • Seek coverage that lasts a lifetime and won’t end before you pass away
  • Are seeking a product that includes a cash value component
  • Understand that permanent life insurance involves significantly higher monthly premiums than term life insurance
  • Want life insurance to be part of your long-term financial strategies
  • Don’t mind paying higher premiums

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When might term life insurance not be worth it?

Term life insurance is a great product, but so is a well-made life jacket, and not everyone needs one of those. If you have no dependents, and no one who will suffer adverse financial effects if you die unexpectedly, then you may not need term life insurance. If your children are grown and financially independent, your mortgage is paid off and your spouse would have enough to live on if you weren’t around, life insurance may not be necessary for you. If you’re single, childless and debt-free, then life insurance might not be worth it right now — though if you may be adding a spouse or child to your life soon, it could be worth getting life insurance now to lock in a lower rate based on your current age and health.

For many people, though, term life insurance is worth it. If you have dependents and you want to protect them financially without taking too much of a hit to your wallet, term life insurance can be a good choice.

Thinking about life insurance? Why you may want to act now

“Buying life insurance” can sometimes feel like one of those to-dos on par with “renovating the kitchen” or “buying a new car.” It’s something you know needs to be done eventually, but the time and expense involved may make you feel like there’s never a “right” time to do it.

Fortunately, it’s easier than ever to buy a term life insurance policy thanks to modern technology (and we’ve already established that coverage can be affordable). Buying life insurance no longer requires you to find a fax machine, scan documents, or print out pages of information. Now, you can apply online for term life insurance and find out instantly if you’re approved. If approved, in some instances you could even start your coverage right away.

Easy + Simple + Inexpensive

“The easiest, simplest process for receiving term life insurance. And the premiums were the lowest quote.” —Michael

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Six steps to buying life insurance online

Step 1: Use a life insurance calculator

Not sure how much life insurance you need? The best way to get a general idea is to toy around with a life insurance calculator. By entering details like your age, income, overall health, and family status, you can find out how much term life insurance coverage is suggested for your family. Check out our online life insurance calculator.

Step 2: Get the coverage you need

Once you’ve decided how much coverage you need, how you want to purchase it and from which issuing company, it’s time to get covered. With Haven Life, you can apply online for the Haven Term policy issued by MassMutual — from your phone or laptop and from wherever is convenient for you. In some cases, you can even get an immediate decision on coverage eligibility. There’s no need to wait 4-6 weeks while your application is reviewed.

Step 3: Take a life insurance medical exam if needed

In many cases, a medical exam will be needed to finalize coverage on a medically underwritten term life insurance policy. With a Haven Term policy, issued by MassMutual, you may be able to access temporary life insurance coverage while you wait for the medical exam results and a decision on your application.

With Haven Life’s InstantTerm process, some applicants may qualify to skip the medical exam. That’s because, in partnership with MassMutual, Haven Life has built technology that can analyze application information in real-time. If the insurer has a good enough understanding of your health and risk, the formality of an exam may not be needed. However, it’s very important to be honest when completing the application — issuing the policy or paying its benefits depends on the applicant’s evidence of insurability, based on their answers to the health questions in the application, and their truthfulness.

Step 4: Name primary and contingent beneficiaries

When you get down to it, the entire goal of life insurance is to take care of your loved ones, which is why the selection of your beneficiaries is a crucial part of the application process.You will need to designate primary beneficiaries, and it’s a good idea to name a contingent beneficiaries as well.

Why Haven Life?

The answer to that question is easy (which is exactly how Haven Life makes applying for term life insurance)

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Peace of mind: So worth it

Those nagging to-dos can drag you down. Getting “buy term life insurance” crossed off your list is worth it for peace of mind. And unlike, say, renovating your kitchen, purchasing term life insurance is an affordable way to provide a financial safety net for your loved ones for the coverage term you select, whether it be a decade, or number of decades, if you were to die during that time.

So … is term life insurance worth it? While there’s no monetary value on peace of mind, for many, knowing you’ve put financial protection in place for your family is everything. And you may find that you can provide this protection for little more than the cost of your monthly music or TV streaming service. Term life insurance may not have a big monthly impact on your budget (which is a good thing) but it can have a big impact on feeling settled and confident that you have protected your family.

Life insurance needs aren’t one-size-fits-all.

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Nicole Dieker is a full-time freelance writer. Her work regularly appears on Bankrate, Lifehacker, The Write Life and numerous other sites. She is the author of Frugal and the Beast: And Other Financial Fairy Tales.

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