Is A Term Life Insurance Policy Worth Anything?

Term life insurance policies are contracts between the policy owner and an insurance company. The owner pays a premium for a specific term, and the insurance company promises to pay a specific death benefit to a beneficiary upon the death of the insured. This benefit is usually tax-free and can be used to care for the family’s needs if the policyholder is no longer there to support them.

The Application Process

Before receiving a policy, the provider will assess the risk of insuring the individual through an underwriting process. This process will evaluate the individual’s health, occupation, lifestyle, and hobbies. The more risky the individual, the higher the rates.

Choosing a Term Length and Death Benefit Amount

Individuals should choose a term long enough to support their family’s needs, usually until their children are out of the house and through college. The longer the term, the higher the monthly payment will be. The death benefit should be enough to care for the family’s needs if the individual is no longer there to support them.

Choosing Beneficiaries

Individuals can choose who receives the death benefit when they die. Beneficiaries can include family, trusts, charitable organizations, or friends.


Most insurance companies offer the option to convert term insurance into a permanent whole life policy later on without a new medical exam. This feature is called convertibility and is useful if the individual becomes uninsurable or wants lifelong coverage.

Guaranteed Renewal Clause

While expensive, if the individual has been diagnosed with a terminal disease, a guaranteed renewal clause allows them to renew their policy at a higher rate on a year-by-year basis.

Comparison Shopping

Individuals should compare insurance rates from various sources and consider the company’s financial stability, customer reviews, and long-term relationship potential.


Term life insurance policies are worth considering for individuals with families. These policies offer a death benefit that can be used to care for family needs if the policyholder is no longer there to support them. By choosing the right term length, death benefit amount, and beneficiaries, individuals can ensure their family’s financial security.

Term Life PolicyWhole Life Insurance
No cash value componentProvides a death benefit and builds cash value over time
Usually lower premiumsHigher premiums
No automatic renewalAutomatic renewal
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