Top Mistakes to Avoid When Buying Term Life Insurance

Life can throw unexpected curveballs, but planning for it shouldn’t be a hassle. Term life insurance is a practical and budget-friendly way to ensure your family’s financial security. Yet, many people stumble upon common pitfalls when purchasing their policies. Let’s break down the key mistakes to avoid and help you make a smart choice. We’ve also answered some FAQs and highlighted top companies to consider.

1. Not Assessing Your Coverage Needs Properly

One of the biggest mistakes folks make is not accurately assessing how much coverage they need. It’s tempting to go for a lower amount to save on premiums, but this can leave your family financially vulnerable. Consider your mortgage, debts, children’s education, and daily living expenses. Tools like calculators from State Farm or Northwestern Mutual can help you estimate the right amount.

2. Ignoring the Term Length

Choosing the wrong term length can be costly. If your term ends before you need it, you might have to buy a new policy at a much higher rate. Think about your long-term needs. Are you covering your children’s upbringing or your mortgage duration? Prudential offers flexible term lengths that can align with various life stages.

3. Relying Only on Employer-Provided Life Insurance

While employer-provided life insurance is a great benefit, it’s usually not enough. These policies often don’t provide sufficient coverage and aren’t portable if you change jobs. Having a separate policy with companies like Haven Life or Banner Life ensures consistent and adequate coverage.

4. Skipping the Medical Exam

Skipping the medical exam might seem convenient, but it can lead to higher premiums. Policies that don’t require a medical exam, like those from Ethos or Bestow, are easier to get but often come at a higher cost. If you’re in good health, taking the exam could save you money in the long run.

5. Not Comparing Multiple Quotes

Insurance rates can vary widely between companies. Failing to shop around can cost you significantly. Use comparison tools on sites like Policygenius or SelectQuote to get multiple quotes and find the best rate for your needs.

Top Companies to Consider

1. State Farm

State Farm offers a range of term life insurance policies with customizable options to fit your needs. Their website provides easy-to-use tools to calculate the coverage you need.
State Farm

2. Northwestern Mutual

Northwestern Mutual is known for its financial strength and offers flexible term lengths and the ability to convert to permanent life insurance.
Northwestern Mutual

3. Prudential

Prudential offers a variety of term life insurance policies with different term lengths and coverage amounts. They also provide riders to customize your policy further.

4. Haven Life

Haven Life is an innovative company that offers a simple, digital approach to buying term life insurance. They provide competitive rates and an easy online application process.
Haven Life

5. Banner Life

Banner Life, a subsidiary of Legal & General America, offers affordable term life insurance policies with a wide range of term lengths and coverage options.
Banner Life

6. Ethos

Ethos aims to make life insurance accessible with their straightforward, no-medical-exam policies. They offer quick and easy online applications.

7. Bestow

Bestow offers term life insurance policies that can be purchased entirely online without a medical exam, making it convenient for busy individuals.


Q: What is term life insurance?

A: Term life insurance provides coverage for a specified period, usually 10, 20, or 30 years. If the insured person dies during the term, the beneficiaries receive a death benefit.

Q: How much term life insurance do I need?

A: It depends on your individual circumstances, such as your income, debts, and the future financial needs of your dependents. A common rule is to aim for coverage that is 10-12 times your annual income.

Q: Can I convert my term life policy to a permanent one?

A: Some policies offer the option to convert to a permanent life insurance policy. Check with your insurer if this is an available feature.

Q: What happens if I outlive my term life insurance policy?

A: If you outlive the term, the policy expires, and you don’t receive any payout. However, you can often renew or convert the policy, though it will likely be more expensive.

Q: Are there any tax benefits to term life insurance?

A: The death benefit from a term life insurance policy is generally not taxable. However, there are no tax advantages while paying the premiums.

Buying term life insurance is a crucial step in securing your family’s future. By avoiding these common mistakes, you can ensure that you’re getting the best coverage possible. Remember to assess your needs, choose the right term length, consider more than just your employer’s policy, take the medical exam if possible, and shop around for the best rates. Companies like State Farm, Northwestern Mutual, Prudential, Haven Life, and Banner Life offer various options that can meet different needs.

Stay informed, plan wisely, and protect your loved ones with the right term life insurance policy.