Life Insurance 101: Temporary Life Insurance
Jeffrey Manola is an experienced life insurance agent and the founder of Top Quote Life Insurance. His mission when he created Top Quote Life Insurance was to provide online consumers searching for life insurance with the absolute best quotes for term life insurance, permanent life insurance, no medical exam life insurance, and burial insurance.
Not only does he strive to provide you with the …
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Written by
Jeffrey Manola
Founder & Licensed Agent
Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs.
She has since used that knowledge in her more than ten years as a writer, largely in the insur…
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Reviewed by
Leslie Kasperowicz
Farmers CSR for 4 Years
UPDATED: Feb 13, 2022
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Facts You Should Know
Temporary life insurance only has value in a guaranteed death benefit
Age, gender, occupational habits, and more affect your temporary life insurance rates
Companies that sell temporary insurance include State Farm, Haven Life, John Hancock, and more
Life brings all kinds of unexpected financial obligations all the time, and your loved ones can be left responsible for them if you are not prepared. Fortunately, investing in a life insurance policy protects your family from bearing the financial burden if something happens to you.
If you are looking for a new life insurance policy or are looking into some of the different coverage options available to you, you have likely encountered temporary life insurance.
Temporary life insurance is a popular type of life insurance sold by most providers and covers you for a set amount of time. Because it varies so widely from other types of life insurance, temporary life insurance has perks that other policies do not.
Keep reading to learn more about what temporary life insurance is, how it works, its pros and cons, and how it differs from other popular life insurance policies, like whole life insurance.
Are you looking to compare temporary life insurance rates? Enter your ZIP code to get free life insurance quotes from companies near you today.
What is temporary life insurance?
Also referred to as term life insurance, temporary life insurance is what it sounds like. It works like other life insurance policies, covering your loved ones in the event of your passing. However, the difference is that temporary life insurance only covers you for a set amount of time, and the premiums you pay only go towards your coverage.
Essentially, temporary life insurance is simply insurance, so it is often called pure insurance. With a temporary life insurance policy, none of your premiums go towards building cash value, and you are guaranteed a stated death benefit if you pass within a set term.
A temporary life insurance policy’s only value is in its guaranteed death benefit. Unlike a permanent life insurance policy, temporary life policies do not include a cash value feature.
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How does term life insurance work?
Temporary or term life insurance policies are sold in 10, 15, 20, and sometimes up to 30-year terms. Depending on the life insurance company you buy from, you may have to provide a medical exam to qualify for a term life policy.
A few factors that life insurance companies take into consideration when determining your temporary life insurance rates include:
Age
Health
Gender
Hobbies
Occupation
Family history
Driving record
Current medications
If you pass away before the end of your set term, your life insurance company will pay your beneficiaries your life insurance policy’s face value as a death benefit. In most cases, a life insurance death benefit is not taxable and can be used to pay end-of-life costs, consumer or mortgage debt, and more.
What happens if I out-live my temporary life policy?
Once a temporary life insurance policy ends, you have a few options from which you can choose.
First, you can choose to renew the policy for the same or another term. The tricky part with renewing a temporary life insurance policy is that life insurance companies will recalculate your rates based on your age at the time of renewal.
So, temporary life insurance rates are usually more expensive when you renew them than when you first purchase it. This is something to consider as you look into buying a temporary life insurance policy.
Next, you can choose to convert your expiring temporary or term life insurance policy into a permanent policy. Many people choose to convert to a permanent policy because of the benefit of extended coverage without the underwriting process.
The only downside to converting your temporary policy to a permanent one is increasing monthly premiums. Permanent life insurance policies are much more expensive than temporary life insurance policies because they have so many more aspects.
When dealing with an expiring temporary life insurance policy, your last option is to let it expire. However, depending on your needs and your family’s needs at the time, allowing your term life policy to expire could be beneficial.
Interestingly, there is also temporary health insurance, which benefits those in need of health insurance coverage for a short amount of time.
If you are unsure whether a temporary life insurance policy is right for you, talk through your options with an insurance agent. Even one conversation will help narrow down your options to only the best companies and policies for you.
How is temporary life insurance different from other life insurance policies?
The nature of a temporary life insurance policy is that it is only meant to cover you for a set amount of time. The time limit sets a temporary or term life insurance policy apart from other popular life insurance policies, such as whole life insurance.
Temporary life insurance policies are different from every other life insurance policy. Other policies, such as permanent life insurance, are meant to cover an individual for the entirety of their lifetime. There is no expiration date, and there are included benefits like building cash value that help customers get more out of their policy.
However, you can choose to purchase a convertible term life insurance policy that includes a conversion rider. Conversion riders allow you to convert an active or about to expire term policy into a permanent policy without going through underwriting or proving insurability.
A whole life insurance policy, on the other hand, offers more benefits than a term life policy. Each policy covers life insurance, but a whole life policy includes cash value and covers you for a lifetime because it has more facets. Whole life insurance costs are significantly more than a term life policy.
Because there are so many different life insurance options to choose from, be sure to research multiple companies and policies before landing on one. It is also beneficial to talk through all of your options with an insurance agent to know that you are getting the best life insurance coverage for your needs.
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What are the best temporary life insurance companies?
You will find that almost all life insurance companies sell temporary life insurance, as it is a popular life insurance option. Some of the top temporary life insurance companies include:
Haven Life Insurance Agency
State Farm
Protective Life Insurance
New York Life
Northwestern Mutual
John Hancock
Guardian Life
Again, be sure to research your company of interest before deciding on a policy. You may find that the coverage one company offers is not exactly what you need, or there may be a better company out there for you.
As a starting point, check out our State Farm Company review for more specific information about the company, including policies, customer reviews, and more.
What are temporary life insurance rates?
Almost every life insurance company sells temporary or term life insurance. Because you are only paying for a guaranteed death benefit, temporary life insurance rates are significantly cheaper than other life insurance rates.
To better understand what you will pay for a temporary life insurance policy, check out the following table for average term life insurance rates from some of the top companies listed above.
As mentioned above, with any life insurance policy and company, a few things affect your life insurance rates. Gender, age, overall health, occupational risks, and more all play a part in determining your temporary life insurance premiums.
Generally, the fastest and most effective way to find the cheapest temporary life insurance rates is to compare quotes from multiple life insurance companies. Comparing a few different quotes gives you a better idea of what to expect to pay for life insurance and helps you get the most out of your policy.
Temporary Life Insurance: The Bottom Line
Which of the following best describes term life insurance? Essentially, term life insurance is life insurance coverage with a set expiration date. When you buy a temporary policy, you pay only for the guaranteed death benefit if you pass within the determined time frame.
Temporary life insurance is an excellent option for those that want life insurance coverage without the extra benefits included in a permanent life policy. A term life insurance policy is especially great for those working their way out of debt and who do not have much money to spend on a life insurance policy.
Unfortunately, the biggest downside to a temporary life policy is its expiration date. You will pay less for a temporary life insurance policy than you will for a whole life insurance policy. However, the nature of a temporary life policy is that it will end rather than cover you for your lifetime.
At the end of your term life policy, you may choose to renew the policy, convert it to a permanent one, or let it expire altogether. Each option has its pros and cons, but it is essential to keep in mind that your rates will increase as renewing and converting are both determined by your age at the time.
Many reputable life insurance providers offer temporary life insurance, so comparing at least three will help you know which company has the best policy for your needs. Comparing multiple companies also ensures that you find the cheapest life insurance rates. After researching companies, talk with your life insurance agent if you are still unsure.
Ready to start comparing temporary life insurance rates? Enter your ZIP code into our free tool below for instant life insurance quotes from companies near you today.
