Home Life insurance Types of life insurance The different types of term life insurance policies explained The different types of term life insurance policies explained There are many different 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: October 9, 2024 Why you can trust Insure.com Quality Verified At Insure.com, we are committed to providing the timely, accurate and expert information consumers need to make smart insurance decisions. All our content is written and reviewed by industry professionals and insurance experts. Our team carefully vets our rate data to ensure we only provide reliable and up-to-date insurance pricing. We follow the highest editorial standards. Our content is based solely on objective research and data gathering. We maintain strict editorial independence to ensure unbiased coverage of the insurance industry. Term life insurance is a type of life insurance that provides coverage for a set period—typically 10, 20, or 30 years—and pays a death benefit if the policyholder passes away during that term. Unlike permanent life insurance, term policies don’t accumulate cash value, which makes them more affordable. However, the specific type of term life insurance you choose can affect your premiums, flexibility, and overall coverage. There are various types of term life insurance policies. Some term life insurance policies have a decreasing death benefit, while others may refund you a portion of the premiums once the term expires. Loretta Worters, vice president of media relations at the Insurance Information Institute, or Triple-I, says most people buy level term — which is the most straightforward and affordable type of term life insurance. Both the premium and death benefit remain fixed throughout the term of a level term policy, making it predictable and easy to budget for. Speaking with a certified financial advisor is the best way to determine which type of life insurance is best for you. Level term life insurance Level term life insurance is the most common and popular type of term life insurance. You lock in a rate when you apply for a policy, and that is the premium that you pay 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. And if you die during the policy’s term, 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 financial security for your loved ones. Return of premium term life insurance With a return of premium policy, the insurer returns the premiums at the end of the term. But unfortunately, there’s a catch: Insurers charge much higher premiums for these policies, and you’ll still end up paying more for coverage even with the premiums you’re returned. 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 insurance Decreasing term life insurance is a renewable policy where 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, director of life marketing 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 price. QuickTake How much term life insurance costs No-medical-exam life insurance: What it is and how it works What is instant life insurance? Permanent life insurance: What it is and how it works What is final expense insurance and how does it work? Whole life insurance: What it is and how it works What is universal life insurance? Types of life insurance What is term life insurance and how does it work? What seniors need to know about buying life insurance What is indexed universal life insurance? What happens if you outlive your term life insurance? The limitations of group life insurance What is simplified issue life insurance? What is variable universal life insurance? A marijuana user's guide to buying life insurance The basics of group life insurance Term life insurance for seniors Term vs. perm life insurance: Which one is right for you? What is optional term life insurance? How to buy group life insurance for your small business See more > Modified term life insurance Modified insurance plans have premiums that change over time, usually in five- to 10-year intervals. 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. Again, term life insurance is a more cost-effective option. Convertible term life insurance Most 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 says. 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 can extend your coverage even if your age or health would have made you otherwise ineligible for coverage. Check if your policy is convertible with your provider before finalizing your policy. Once a policy is active, riders can’t be added on. Which type of 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. Compared to the other types of term life insurance, you’ll get the most bang for your buck with a level term policy. Level term life insurance policies can come in the form of no-medical-exam insurance and online life insurance, as well. 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. 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. × 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. 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