What is Term Life Insurance and Who Can Apply for it?

For many Americans, term life insurance represents an important investment. It is one of the more popular forms of life insurance, with its key benefit residing in the fact that the designated beneficiary receives a death benefit from the insurer. 

Moreover, it is a relatively affordable form of life insurance, and its popularity has risen in recent times, particularly due to the COVID-19 pandemic. These days, a lot of people are looking at term life insurance and wondering how to begin investing in it. There may also be a bit of confusion about who it best serves. 

Well, in this article, we will take a close look at everything you need to know before you start investing. So, let’s jump right in. 

Term Life Insurance: An Affordable Time-Bound Option

Term insurance, as the name suggests, lasts for a specific amount of time. This usually ranges anywhere from 10 to 30 years. Thus, unlike whole life insurance, which lasts for your entire lifetime (as long as you pay premiums), term life is temporary. 

This is one of the reasons why it can be significantly cheaper to afford. For instance, it isn’t uncommon to see a $500,000 policy for a 30-year-old woman go for $16 a month with term life insurance. Meanwhile, the premiums for whole-life insurance coverage of the same amount might be as high as $352 per month. 

That said, one disadvantage of term life insurance is that the amount doesn’t accrue any cash value. This means that you can’t really take out a loan against it like you can with most whole life insurance policies.

As a result, people who use term insurance tend to be worried about the use of the policy if they outlive the term period. After all, the policyholder doesn’t receive any payout if they exceed the term limit. Term insurance only kicks in when the policyholder passes away, at which point the beneficiary gets the insurance amount, usually as a tax-free lump sum. 

Are There Any Eligibility Requirements for This Type of Insurance?

If you are considering a term life insurance policy, you shouldn’t have to worry about eligibility too much. These policies are easier to apply for when compared to whole life insurance. 

That said, insurers tend to look at a few parameters for both types. Life insurance requirements include age, health, financial commitment, and term length. Term policies are usually available between the ages of 18 and 65. 

If you happen to be older than that, it can be a little difficult to get a policy, and the premiums can be more expensive. Also, you will begin to experience stricter medical examinations, as is the case with whole life insurance.

According to 1891 Financial Life, some insurance companies will skip medical examinations due to how time-consuming they can be. However, the premiums you have to pay end up being more expensive.

Whole-life insurance plans, on the other hand, can be found for juveniles and seniors alike. However, they do tend to warrant comprehensive medical exams, and health status can significantly impact premiums. 

Thus, eligibility criteria for both term and whole life insurance are rife with trade-offs. With a little bit of self-reflection, you should be able to understand which insurance plan is ideal for your situation.

3 Tips to Help Decide Which Insurance is Appropriate for You

There are a couple of ways you can go about finding out which insurance type is ideal for your situation. Let’s look at three of them. 

1. Assess Your Financial Needs

If you need coverage for a particular period of time but don’t really care about insurance after that, term life can be for you. For instance, this period could be the time it takes your kids to complete their education or how long it takes to pay off a mortgage. 

2. Budget

Naturally, how much you pay every month can seriously affect you. The last thing you want is to be paying hundreds of dollars for a whole-life policy when you are short on cash. 

3. Think About Your Investment Goals

For people who wish to invest, a whole-life policy is often the best option because it often includes an investment component. As mentioned earlier, unlike term insurance, the cash value of whole-life policies does grow. It is also tax-deferred and can be borrowed upon if needed. 


Term insurance is a great option for those who understand its limitations. Sure, you aren’t going to be getting pure lifetime coverage, but for a lot of people, a 30-year policy is acceptable. When you consider the amount saved in monthly premiums, it is no longer surprising that these policies have so many takers. 

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