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The Best Term Life Insurance for 2020
Depending on which stage of life you’re currently enjoying, some types of life insurance may be a better choice than others. For younger to middle-aged adults, term life insurance may be particularly attractive as it can be obtained in large amounts for a comparably low cost. Those who have families or children like the peace of mind that a term life insurance policy brings — a guarantee that their loved ones will be taken care of if they can no longer provide for them. If this sounds like what you’re looking for, compare your options for the best term life insurance companies out there.
We compared and reviewed the best term life insurance using the SimpleScore methodology, which considers riders, customer satisfaction, support, accessibility and coverage options.
Use this calculator to compare quotes from multiple life insurance companies.
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The 6 best term life insurance companies of 2020
- Best Overall: Northwestern Mutual
- Best Return of Premium: State Farm
- Best Riders: Mutual of Omaha
- Best for Older Applicants: Principal Financial
- Best Online Tools: Liberty Mutual
- Best for Military Members: USAA
The best term life insurance companies at a glance
| Brand | J.D. Power | Coverage Options | A.M. Best | Standard & Poor’s | SimpleScore |
|---|---|---|---|---|---|
| Northwestern Mutual | 5/5 | 4 | A++ | AA+ | 4.5/5 |
| State Farm | 5/5 | 3 | A | AA | 4.6/5 |
| Mutual of Omaha | 4/5 | 4 | A+ | AA- | 4/5 |
| Principal Financial | 4/5 | 3 | A+ | AA- | 3.2/5 |
| Liberty Mutual | 4/5 | 4 | A | A | 3.8/5 |
| USAA | N/A | 5 | A++ | AA+ | 5/5 |
Best overall – Northwestern Mutual
Northwestern Mutual makes term life insurance easy to understand and purchase. It also makes customer service its number one priority.
Northwestern Mutual has been protecting Americans since the mid-1800s, so it shouldn’t come as a surprise that their term life insurance policies are long-standing favorites. Customers surveyed by J.D. Power named Northwestern Mutual as their number one choice in the 2019 U.S. Life Insurance Study, beating more than 20 competitors in the race to the top. Term life insurance options include four different plans; three offer renewable coverage for a period of 10 to 20 years, and the fourth is an annually renewable policy that can be continued until the age of 80. Of course, these plans can also be converted to a whole life policy once your needs change.
Best return of premium – State Farm
Return of premium coverage is a great low-risk way to protect your dependents, although you’ll need to have enough cash on hand to pay the high premiums.
State Farm offers multiple term life options, but its most unique is the return of premium policy. With return of premium coverage, you’ll pay premiums for 20 or 30 years at a guaranteed rate. However, if the benefits haven’t been paid at the end of the term, you’ll get your premiums back. State Farm gives you the option to renew this policy up to the age of 95, offering a lifelong insurance solution.
Best riders – Mutual of Omaha – Life Insurance
Mutual of Omaha’s choices of riders breathe life into a traditionally cut-and-dry type of insurance.
The half-dozen riders available with Mutual of Omaha’s term life insurance plans range from standard add-ons to highly unique coverage. As a policyholder, you can choose to have your premiums waived for six months or longer if you become unemployed or disabled, add coverage for children, or receive up to 94% of death benefits in the event that you become terminally ill. Just keep in mind that not all term life policies are eligible for every rider; you’ll need to speak with an agent to discover the full list of options available to you.
Best for older applicants – Principal Financial
Most seniors don’t think term life insurance is an option, but Principal Financial makes it possible.
Term life insurance is traditionally considered a policy best suited for younger adults, but there are certain cases in which it makes sense, particularly if you’re healthy and looking for more flexible coverage. Many carriers won’t issue term life plans to older adults, sometimes limiting the enrollment age as low as 50. But Principal Financial issues policies to applicants as old as 80 for a 10-year policy term. The provider’s online calculator makes it quick and easy to decide how exactly much coverage you need and adjust benefits to meet your budget.
Best online tools – Liberty Mutual
Liberty Mutual’s online resources provide answers to all the questions you were too embarrassed to ask about life insurance.
If you’ve never purchased term life insurance before, you might not have any idea about what type of coverage you need — not to mention how much you should purchase. Liberty Mutual offers a free online life insurance calculator that takes your personal details, income, debt, savings and family plans into consideration to show you how much coverage is appropriate. Once you’ve settled on a total amount, you can use the instant online quote tool to get a monthly or annual estimate in seconds. Liberty Mutual will even forward your quote directly to a local agent who can help you purchase the policy.
Best for military members – USAA
Standard term life insurance doesn’t cover deployment, so turning to USAA shouldn’t be a question for active military members.
Members of the armed forces make many sacrifices for their country, not the least of which is leaving their families for extended periods of deployment in dangerous places. But many life insurance policies have a war exclusion, meaning if a tragedy happens while a soldier is deployed, the policy won’t pay benefits to surviving family members. USAA life insurance offers policies exclusively to members of the U.S. armed forces with specific coverage for time spent serving abroad. Individuals up to the age of 35 can benefit from an additional $100,000 in coverage if they get married, purchase a home or have a baby, and all children can be added to the policy for less than $8 per month.
What is term life insurance?
Term life insurance is a type of life insurance that has a predetermined end date, typically after a set number of years or once the insured reaches a specific age. If you take out a term life insurance plan and you pass away before the end of the term, the benefit amount will be issued to the person you name in the policy, usually a dependent or family member. Younger to middle-aged adults generally take out life insurance plans to make sure the family they support will still have financial stability in the event that something happens to them.
[ More: How Much Term Life Insurance Do You Need? ]
How term life insurances works
When purchasing a term life insurance policy, you’ll first choose a term and a benefit amount depending on your age, family status and financial obligations. An insurer will issue a policy based on these two variables and your personal details; you may need to undergo a medical examination during the underwriting process. You’ll also need to name a beneficiary. Once you have a policy, you’ll pay set premiums on a monthly or annual basis for the full term. If you die before the end of the term, the beneficiary will receive a payout according to the amount of coverage you purchased.
Types of terms
There are two basic types of terms that you can choose with term life insurance. The first is a set term, most commonly between 10 and 30 years. These can generally be renewed up to a certain age as long as you wish to continue coverage, although your premiums can certainly increase upon renewal. The second type of policy extends to a certain age, often 65, regardless of how old you are upon enrollment. Both types of terms are contingent upon premiums continuing to be paid in full and on time.
Premiums
Term life insurance premiums are paid on a monthly or annual basis. Insurers calculate rates primarily based on your age and health, although other factors such as your job and driving record can be taken into consideration as well. In most cases, premiums will be determined during the underwriting process and remain the same for the full policy term, although they may increase over time with some longer-term policies. Premiums will also go up at renewal in accordance with your age. Certain term life policies return your premiums to you if no benefits are paid before the end of the term; these are called return of premium (ROP) policies.
[ Next: Term, Whole and Universal Insurance: Which One Is Right for You? ]
Guaranteed renewability
When you purchase a term life insurance policy with guaranteed renewability, your premium will be set for the initial term based on the results of the underwriting process. Once the policy term ends, the insurer will keep extending coverage to you as long as premiums are paid. While premiums can increase at the start of each new term as you get older, you won’t need to submit to another medical exam and therefore won’t be denied coverage based on your health. Term life insurance policies are usually renewable up to a specific age laid out in the initial policy documents.
Term life insurance vs. whole life insurance
The main difference between term life insurance and whole life insurance is that while term life insurance is only valid for set periods of time, whole life insurance never expires as long as premiums are paid. The majority of term life benefits are never paid as the insured party’s chance of passing away is relatively low; however, all whole life plans will eventually issue a payout to the beneficiary upon the policyholder’s death, whenever that may be. As a result, premiums are generally lower for term life than whole life insurance. The latter is most popular among younger adults while the former is a common financial planning solution for seniors.
[ Read: Young Adults Are Buying Insurance Like Hotcakes in 2020 ]
How to choose the best term life insurance for you
- Find out how much coverage you need. Use Liberty Mutual’s life insurance calculator to get a suggested amount based on your personal information and financial situation.
- Choose a term. Policies are generally available in periods of 10 to 30 years or up to the age of 65. Factors you may want to consider include your mortgage term and the number of years you anticipate needing to support any minor children.
- Consider additional coverage. For example, you may want a policy that waives premiums during periods of hardship or advances benefits in the event of a terminal illness.
- Think about converting. Many term life insurance policies can be converted into whole life insurance, but each insurer has a different set of rules and deadlines. Before signing up for a policy, think about if and when you might want to switch coverage and make sure the deadline seems reasonable.
- Compare quotes. Each life insurance carrier weighs contributing factors differently, so you may get a better quote from one company over another.
Term life insurance FAQs
The amount of term life insurance you need depends on several factors. You should first make sure the total death benefit covers your existing financial obligations (like your mortgage) and big-ticket future costs such as college tuition for dependent children. Then, calculate your dependents’ annual living expenses and multiply that by the number of years you want to ensure support. Don’t forget to leave room for final expenses so your dependents won’t have to shoulder funeral costs.
Term life insurance is best for adults who provide financial support to families and dependents. In the event that you pass away prematurely, a term life insurance policy can continue to provide ongoing support to those who rely on you and cover any outstanding financial obligations such as a mortgage balance.
One of the biggest advantages to life insurance is that it’s relatively inexpensive, especially for younger, healthy adults. If your resources are limited, your dependents will rely even more on life insurance if you can no longer provide for them. You may be surprised by how little life insurance premiums are for comparably high benefits.
Too long, didn’t read?
Term life insurance offers flexible coverage for a set number of years, offering peace of mind and security that your dependents will always be provided for. Premiums are often surprisingly affordable, so it’s worth gathering quotes from our list of best term life insurance companies.
We welcome your feedback on this article and would love to hear about your experience with the life insurance providers we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.
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Reviewed by
Nashalie Addarich
Insurance EditorNasha Addarich is an editor at The Simple Dollar and a former attorney who specializes in home insurance, auto insurance, life insurance, and savings. She is a former contributing editor to Reviews.com.
