Shopping for term life insurance: What to look for

This article will ... Review what a term policy is and isn’t. Note the basics of term coverage that should be considered. Highlight features that can make term insurance valuable beyond its immediate coverage.

When you’re comparing term life insurance policies, it’s easy to get fixated on the monthly premium. After all, everyone loves a good deal. But when it comes to protecting your family’s financial future, you need to look at more than just the price tag.

Sure, a good policy should match your financial needs today. But it should also offer flexibility for the future and come from an insurer you can actually rely on.

“Price is important, but people sometimes don’t realize how much the experience and standing of the carrier behind the policy matter as well,” said Kenneth T. Podell, a senior partner at Broad Street Financial in Radnor, Pennsylvania. “I’ve seen people pleased by price when they purchased, then disappointed when it came to policy details down the road.”

Keep in mind what term life insurance does and doesn’t do. A term life policy provides coverage for a specific period of time, provided premiums are paid properly. If you outlive your policy term, your coverage expires and no death benefit is paid to your beneficiaries, unless the policy is renewed or converted to permanent life insurance. Term life insurance, generally, does not accumulate cash value.

By contrast, permanent life insurance (such as whole life, universal life, and variable life) is intended to provide lifetime coverage. Such policies also may accumulate cash value, which can be accessed during the policyowner’s lifetime.

Many people decide to check in with a financial professional to get some guidance about protection needs.

With that understood, if you’re shopping for term life coverage, here is a checklist of the seven key factors you need to consider.

1. Coverage amount (death benefit)

This is the core of your term life policy — the tax-free lump sum your beneficiaries will receive if you pass away during the term. In most situations, you need to make sure that it’s enough to keep your family financially stable. Beyond that, you may want to consider how the death benefit would:

• Replace your income: You want to help your family maintain their standard of living.
• Pay off debts and the mortgage: You don’t want to leave your partner or loved ones burdened with loans.
• Cover future expenses: Think about long-term costs, such as your children's college education. Or a spouse’s retirement.

If you want to run the numbers and see where you may stand, our Life Insurance Calculator is a great starting point. But remember, there may be additional factors as well, depending on personal goals and circumstances. (Related: How much life insurance do I really need?)

2. Term length

Term life insurance is designed to cover you for a specific period. You need to choose a term that matches your longest-lasting financial obligation.

• Common options: Policies typically come in 10-, 20-, or even 30-year terms.
• Match your timeline: Think about how long your dependents will rely on your income, or how many years are left on your mortgage.

If your coverage ends too soon, you could be left unprotected at an older age when a new policy will likely be significantly more expensive.

3. Policy features & riders

Riders are optional add‑ons that allow you to customize your coverage or add living benefits. While they can be incredibly valuable, be mindful — additional riders can increase your premiums. Common riders include:

• Accelerated death benefit: This allows you to access a portion of the payout early if you are diagnosed with a terminal illness.
• Waiver of premium: The insurer waives your premium payments if the insured become totally disabled and can't work.

For a deeper dive into how these add-ons work and which ones might make sense for you, check out our guide on understanding life insurance riders.

4. Exclusions & limitations

Nobody likes reading the fine print, but with life insurance, it’s highly advisable. All policies have specific exclusions detailing what isn’t covered. Common exclusions include:

• The suicide clause: Typically, policies will not pay out if the insured commits suicide within the first 1–2 years of the policy.
• Criminal acts: Death occurring while committing a crime is generally excluded.
• High‑risk activities: Certain dangerous hobbies (such as skydiving or scuba diving) might be excluded or require a specialized, higher-cost policy.

Reading the exclusions carefully helps you avoid devastating surprises when it comes time for your family to file a claim. (Also: Why you shouldn’t lie on a life insurance application)

5. Financial strength & claims reputation

A life insurance policy is a contract — a piece of paper that says an insurer will be there for your family when the worst happens. That promise is only useful if the company actually has the money to pay the claim. When evaluating an insurer, check:

• Financial ratings: Look at ratings from independent rating agencies like A.M. Best, Moody’s, and Standard & Poor's. (See: Understanding financial strength ratings)
• Reputation: Research their customer satisfaction and claims settlement history.
• Structure: Life insurers can be public companies controlled by stockholders or mutual companies owned by policyowners — namely, their customers. To some, that makes an important difference. (Learn more: 3 advantages of mutual insurers)

Stronger, well-established companies are more likely to weather economic storms and honor claims reliably.

“Work with a company that has the right products for you and that has high ratings,” advised Podell. “The company should also offer excellent customer service and have a good relationship with the people selling their products.”

6. Renewability & Conversion Options

Life is unpredictable. The 20-year term policy that makes sense today might not fit your needs 15 years from now. Look for policies that offer flexibility:

• Renewability: Some term policies allow you to renew coverage annually after the initial term ends (though usually at a higher cost).
• Conversion: Many policies let you convert your term coverage to a permanent life policy without having to take a new medical exam.

Not sure if you'll eventually want lifelong coverage or cash value benefits? Read up on the differences between term and permanent life insurance to see why a conversion option is a powerful feature to have in the future.

“The policy should be convertible to a quality permanent policy that you would be happy to own,” noted Podell.

7. Premiums (Cost)

Finally, you need to compare premium quotes. But remember: compare quotes across different insurers not only for the same coverage amount and term length, but also for the features and riders listed above.

Rates can vary significantly between companies even for identical coverage. You’ll generally see two pricing structures:

• Level premiums: Your monthly payment stays exactly the same for the entire duration of the term. (This is the most common and predictable option.)
• Annual renewable premiums: These premiums start out very cheap but rise each year as you get older.

Conclusion

Shopping for term life insurance doesn't have to be overwhelming, but it does require a bit of homework. By looking past the initial price tag and evaluating the coverage, features, and the company standing behind the policy, you can secure true peace of mind for your family.

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Frequently Asked Questions (FAQs)

Can I change my term life insurance to a permanent policy later?

Many term life insurance policies include a conversion option. This allows you to convert some or all of your term coverage to a permanent policy (like whole life) before the term expires, usually without needing to take a new medical exam. (Related: The power of a term-perm life insurance combination)

What happens if I outlive my term life insurance policy?

If you outlive the term (e.g., you reach the end of a 20-year policy), your coverage simply expires, and the insurer does not pay a death benefit. At that point, you can choose to let the policy end, renew it on an annual basis (which is typically very expensive), or apply for a new policy if you still need coverage.

How much term life insurance do I actually need?

When determining the right size for your life insurance policy, you must look far beyond a simple multiple of your current salary and strategically evaluate five critical areas of financial obligation to help protect your family's future. You need to calculate the full scope of your lost future income potential — including the often-overlooked economic value of a caregiving spouse — while accounting for the staggering costs of replacing employer health benefits, funding childcare, and covering future college tuition. Furthermore, you must factor in immediate burdens like end-of-life expenses, outstanding mortgages, and other debts. (Related: 6 signs that you may be underinsured)

Discover more from MassMutual …

Your step-by-step guide to understanding life insurance

Why you need both life and disability insurance

Tips for buying life insurance

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