Best Term Life Insurance Companies In America

Key Takeaways

The best term life insurance company balances cost with coverage amount
No medical exam life insurance means your health conditions won’t impact the cost
Ethos is the best no exam, term life insurance company

Best Term Life Insurance Companies In America

If you’re not around anymore, you still want your loved ones to be able to afford life. Term life insurance gives a death benefit to your loved ones in case the worst happens. It’s the most budget-friendly type of life insurance, excellent for sole income-earners.

The right life insurance can be invaluable. In this guide, we will go over the best term life insurance companies, what term life insurance is, and what affects term life insurance cost.

Best Term Life Insurance Companies in the US

1. Ethos

Ethos is the best term life insurance company in America. The policies are customizable, allowing for up to $3 million of coverage. No medical exam is required, which makes it excellent for those who are worried about their health conditions impacting the cost. Ethos also has a strong financial strength rating, so they are a reliable insurer for those who want the best coverage quality.

Ethos policies start at less than $1/day.

2. Ladder

Ladder allows you to get quick policy issuance within minutes. The 100% digital term life insurance process makes it very convenient and swift. Coverage amounts range from $100,000 to $3 million.

3. Legal & General Banner Life

If you need a lot of coverage, Banner Life Insurance offers up to $10 million in coverage. You can buy term life insurance from 10 to 40 years. Not all life insurance companies offer 40 year terms.

4. Fabric by Gerber Life

Fabric is a convenient term life insurance company because they allow you to apply online with a simple application. You can get coverage up to $1.5 million. No medical exam is required and the application process can take as little as ten minutes. While convenient and affordable, the company has seen negative customer reviews.

What is Term Life Insurance

Term life insurance offers temporary life insurance coverage throughout a specified term (e.g. 10 years). If you pass away, insurance will provide a death benefit to your beneficiaries. The money can be used to cover anything from a mortgage to everyday expenses.

Compared to other types of life insurance, term life insurance is generally the simplest and most affordable. You can choose the term and how much coverage you need. When you buy term life insurance, the premium is the same for the entire term.

5, 10, 15, and 20-year term life insurance policies are common. Certain companies offer terms of 40 years. If you ever want to make your term life insurance last until you die, some insurers will let you convert your policy to a permanent one. This can be useful because term life insurance doesn’t build cash value.

Term vs permanent life insurance difference

Even though both term and permanent life insurances are meant to support your beneficiaries in case of your death, they have key differences.

Term life insurance only lasts for the temporary period of time that you choose upon buying the policy. Generally the longest you can have it for is 40 years, and then you have to renew the policy. Term life insurance is budget-friendly, but every time you renew, premiums can increase.

Permanent life insurance will last until your death (as long as premiums are paid). It can also come with benefits such as cash value accumulation, tax advantaged growth/withdrawals, and dividend eligibility on whole life policies. Permanent life insurance policies cost more at the start compared to term life because permanent has better long-term value. The whole life premium won’t go up during coverage.

What to Look for in Term Life Insurance

Coverage amount

You can set the amount of coverage you need when purchasing term life insurance. Generally, this means looking at your income and how much of a death benefit is needed. Choosing the right coverage amount is crucial because your premiums and limits will be locked in for the duration of your policy. Here are some guidelines to help you choose a suitable coverage amount:

Get life insurance for at least ~10 times your annual income. Factor in expected inflation. $200,000 today won’t have the same buying power 30 years from now

Use the DIME method. Break down expected debt, income, mortgage, and education costs. Make sure you cover enough to pay off your home, expected tuition costs, and debts that can go to your dependents

Consider your age and status. If you’re young and single, you might only need coverage for current debts and funeral costs. If you have children, a larger policy makes more sense because the death benefit needs to cover a wide range of expenses

Monthly premium

The average cost of term life insurance is around $200 a year for people aged 30. However, the premium can vary greatly depending on your age, gender, health, and other factors. For example, a 30 year old smoker might have to pay $750 a year for term life insurance.

Riders and endorsements

You may be able to customize your coverage depending on you and your dependents’ needs.

Accidental death benefit rider: On top of the regular death benefit, your beneficiaries can receive an additional amount if you pass away due to an accident. This is different from AD&D insurance, which is a complete standalone policy common for travelers or risktakers. You can choose for the AD rider to be attached to the policy until a certain age or for the entire policy.

Accelerated death benefit rider: In case you get a terminal illness or other qualifying condition, you can receive a benefit to help your situation. Yes, this means you’d get it while alive so you could use the money to pay for sudden expenses such as a nursing home.

Approval process

Unless you choose a no exam life insurance policy, life insurance companies will want to assess how healthy you are. A medical exam that goes in your favor is obviously good–it can reduce your life insurance cost because the insurance company doesn’t expect to need to give a payout during the policy term unless there is an unlikely accident or illness. If you have poor health, though, you might prefer a no exam life insurance policy.

What Affects Term Life Insurance Cost

Age

Generally, the younger you buy life insurance, the cheaper it will be. People tend to develop more serious health conditions when they grow older. Life insurance is the cheapest if you buy it young. You can also obtain life insurance for children 17 or younger, but the insurer may impose certain age caps and coverage restrictions.

Coverage amount

A million-dollar life insurance policy will naturally cost more than a $100,000 one. The death benefit amount greatly impacts your policy premium. Common coverage amounts are:

$100,000
$250,000
$500,000
$1,000,000

Health

Existing health conditions can make life insurance very expensive. They are all mortality risks.

Most term life insurance policies require a medical exam during the application process. It can also be called a paramedical exam, and typically includes:

An interview that involves asking for your health history and your family’s health history, your prescriptions, and pre-existing conditions
Height, weight, pulse, blood pressure
EKG for 50+ years old applicants
Cognitive tests for those over 70

It is recommended to get plenty of rest and avoid intense exercise before doing a medical exam for life insurance. You can’t exactly “fail” a life insurance medical exam, but you may be denied coverage if the insurer assesses the risk to your health as too great. If you’re suffering from serious health conditions, consider getting a no medical exam life insurance policy.

Underwriting type

The underwriting process is the risk assessment that life insurance companies do on applicants. If you have health issues or want a faster insurance approval, you may want to look for a policy with a special issue.

Simplified issue: The application is simpler and no medical exam is required. There is less coverage and the policy will cost more.

Guaranteed issue: Fastest issue and is guaranteed. However, death benefits are typically low, only enough for minor expenses and a funeral.

AI-based approval: Depends on the insurer and your situation. More insurance companies are turning to AI to underwrite insurance based on the information you give. AI-based approval is faster than regular underwriting because AI doesn’t require a needle in your arm, just to look at your data and compare it to other policyholders.

Employer sponsored life insurance: An alternative to private life insurance. Your employer may sponsor group life insurance plans that are more affordable. A health exam may not be mandatory.

Location

Not a lot of people know this, but where you live can actually affect your life insurance policy. You won’t necessarily get a higher premium just because you live in a flood zone. However, each state has its own rules for late insurance payments, life insurance insolvency, free look periods, and beneficiary restrictions. Some states also have state guarantee associations that provide death benefits if your life insurance company goes bankrupt.

Are you an American expat who wants term life insurance? If you live abroad, term life insurance options will be limited. Insurance companies may be willing to cover you if you live in America for at least 6 months in a year or if you have a particularly high global net worth.

Gender

Term life insurance is typically more expensive for males than for females. Women have a higher average life expectancy.

Who Needs Term Life Insurance

Primary income earners with dependents

If you’re a parent/guardian or you have people who depend on your income to survive, it’s responsible to consider life insurance.

People with a mortgage

Debt can be a problem for your family if you pass away as the breadwinner. If the mortgage can’t be paid off, your dependents might have to leave the house.

Small business owners

Small businesses, especially ones with no employees, can benefit if the owner has term life insurance.

How Much Does Term Life Insurance Cost

Term life insurance premiums vary greatly depending on your age, coverage amount, and your health status. Smokers are expected to pay significantly more. Here are some estimates:

10-year term life insurance costs around $20 a month for $100,000 coverage. For older buyers up to 70, it can cost over $400 a month.
20-year term life insurance costs around $20 a month for $500,000 coverage. For older buyers over 50, it can cost over $250 a month.
30-year term life insurance costs around $25 a month for $250,000 coverage, and $33 for $500,000 coverage. For older buyers up to 50, it can cost over $80 a month.

In general, shorter terms will cost more if you are older. This is because life insurance companies take on greater risk by insuring an older policyholder. In addition, they may reject your insurance application if you are 70 and applying for a 30-year term.

Term life insurance cost by coverage amount

Let’s take a look at example life insurance premiums for a non-smoker who is looking for 20 years of term life insurance.

__Estimated Monthly Premiums (20 year term) __

Age	$100,000 coverage	$250,000 coverage	$500,000 coverage
25	$10	$15	$20
35	$12	$20	$30
45	$20	$40	$50
55	$45	$90	$150

Your real quote can vary depending on your health, insurance company, and other factors. But as you can see, the calculations are complicated. You can’t simply multiply the premium by 2 to obtain double the coverage amount.