Term life insurance can help replace your income and cover expenses if you die while the policy is active. But if no one relies on you financially and you have enough savings to cover your obligations, you may not need it.
Because term life insurance provides coverage for a limited period and generally doesn’t build cash value, it typically costs less than permanent life insurance. The key is choosing a coverage amount and term that fit the financial support you're trying to provide.
Is term life insurance worth it?
The first question is whether your death would create a financial hardship for someone else. The second is how long that financial need is likely to last. If others rely on your income, care, or support and the need is temporary, term life insurance may be worth considering.
With term life insurance, you choose a coverage amount and a term, such as 10, 20, or 30 years. If you die while the policy is in force, the insurer pays a death benefit to your beneficiaries. If you outlive the term, the coverage will end without a death benefit being paid.
Some policies may let you renew coverage or convert some or all of it to permanent life insurance. Those options may have deadlines, limits, and higher premiums, so it’s worth understanding them before you buy. To learn more, read Viewpoints: What are the different types of life insurance?
Term life insurance may be especially valuable if you:
- Have children or other dependents
- Have a mortgage or other debt that someone else may need to repay
- Help support a spouse, partner, parent, or other family member
- Want to cover future education or child care costs
- Own a business that depends on your work
- Haven’t yet accumulated enough savings to support your family without your income
It’s also worth thinking about the value of unpaid work. A stay-at-home parent or other unpaid caregiver may not earn a paycheck, but replacing the care they provide could require the household to pay for child care, transportation, household help, or other services.
How to decide if term life insurance is worth it
Start with a practical question: If you were no longer here, who would be financially affected?
- Who depends on you?
- What income, care, or services would need to be replaced?
- What debts and future expenses would remain?
- How much could existing savings and insurance cover?
The gap between what others would need and the resources available to them can be a starting point for estimating how much additional coverage you may need. Read Viewpoints: How much life insurance do I need?
How long should your term life insurance last?
Ideally, your policy should last as long as others are likely to need your income, care, or financial support.
For example, you might align the term with the years remaining on a mortgage, the time until your youngest child is expected to become financially independent, or the period until your household expects to rely on retirement savings and other income.
Consider multiple obligations together. If you have 15 years remaining on your mortgage but expect your youngest child to need support for 22 years, a 20- or 25-year term may fit better than a 15-year policy.
The following examples show how a financial need could help determine the length of a policy term.
| Financial need | Possible policy term | Why |
| 18 years remaining on a mortgage | 20 years | Could help protect the household until the mortgage is close to being paid off |
| A newborn or young child | 20–30 years | Could provide protection through the child-raising and education years |
| 12 years until retirement | 10–15 years | Could help replace income until the household expects to rely on retirement savings and other income |
| 8 years of business, joint, or cosigned debt | 10 years | Could help another person manage an obligation they may be responsible for |
| Several overlapping needs | Consider the longest significant need | Could provide coverage until the household may be better able to absorb the financial loss |
These are examples rather than recommendations. The appropriate term depends on factors including your age, budget, health, family situation, existing assets, and financial goals.
A longer term can provide more certainty, but it generally costs more. Waiting and applying for another policy later may also be more expensive as you age or more difficult if your health changes.
When comparing policies, check whether coverage may be renewed or converted, when those options expire, and how they could affect premiums.
Try Fidelity’s Term Life Insurance Coverage Calculator1 to get an estimate of your need for life insurance coverage.
Term life insurance vs. permanent life insurance
Term life insurance may work well when the financial need has a likely end date, such as replacing income while raising children or covering a mortgage. It provides coverage for a set period of time and generally has lower initial premiums than permanent life insurance. To learn more, read Term life vs. whole life insurance
Permanent life insurance is designed to provide lifelong coverage as long as policy requirements are met. It generally costs more than term life insurance and may include a cash value component. Permanent coverage may be appropriate for people with a lifelong insurance need, including certain estate planning, business succession, or legacy goals.
Neither type is automatically better. The right choice depends on how long you need coverage, which policy features matter to you, and how much you can comfortably afford. Some people may use both types to address different needs.
What happens if you don’t have life insurance?
Life insurance isn’t legally required, and some people can reasonably go without it. But if you die without enough life insurance or other financial resources, the people who depend on you may have to make difficult financial adjustments.
A surviving spouse or partner might need to cover housing costs with one income, increase their earnings, reduce education savings, or draw from retirement accounts. Loved ones may also need to pay final expenses or replace care and other unpaid work you provided.
That doesn’t mean everyone needs a policy. It means you need a plan. If your savings and other resources would be sufficient, you may be able to self-insure. If there is a meaningful financial gap, life insurance could help fill it.
When term life insurance may not be worth it
You may not need term life insurance today if no one relies on you financially and you have enough savings or other resources to meet your financial obligations and cover final expenses. It may also become less necessary as your children become financially independent, your mortgage is paid off, or your household accumulates enough assets to absorb the loss of your income or unpaid work.
Before deciding to go without coverage, consider whether your financial responsibilities are likely to change. Term life insurance could be worth considering if:
- You expect to marry, have children, buy a home, or take on other financial responsibilities.
- A family member may need your financial support in the future.
- Someone has cosigned or jointly holds one of your debts.
- Your savings may not be enough to cover final expenses or other immediate costs.
Term coverage may no longer be necessary if the people who once depended on you can now meet their needs without your income, care, or financial support.
Is term life insurance a waste if you outlive the policy?
Not necessarily. Term life insurance is designed to protect against the financial risk of dying during a specific period—not to produce a return. If the term ends without a claim, that generally means you had protection during the years you needed it and your beneficiaries did not need the death benefit—just as you hope never to file a homeowners or auto insurance claim.
How to get term life insurance
1. Estimate how much coverage you need
Estimate the income that may need to be replaced, along with debts and major expenses you want the policy to help cover. Then subtract existing life insurance and other assets that would be available to those who depend on you.
Employer-provided life insurance can be a useful benefit, but the coverage may be less than you need and, depending on the plan, may not follow you if you leave your job. An individual policy can provide coverage that isn’t tied to your employer.
2. Choose a term length
Consider how long your dependents may need support and when major obligations, such as a mortgage or education costs, are likely to end.
3. Compare policies and insurers
When comparing policies, look closely at your options if your needs change later. Some term policies may let you renew coverage after the term ends or convert some or all of it to permanent life insurance, but those options may expire and could affect your premiums. Quotes can vary, so compare similar coverage amounts and term lengths.
Fidelity’s Quote Tool2 can provide an estimate of how much coverage may cost. The estimate is based on information such as your age, height, weight, state of residence, tobacco use, desired coverage amount, and term length.
4. Complete the application
You’ll typically provide information about your health, medications, family medical history, occupation, and lifestyle. Depending on the insurer and policy, you may need a medical exam.
5. Review the offer
Your approved premium may differ from your initial quote based on underwriting. Make sure the coverage amount, term, premium schedule, beneficiaries, and policy features are correct before accepting it.
6. Revisit your coverage regularly
Review your insurance after major life events such as marriage, divorce, the birth of a child, a home purchase, or a job change. Your need for coverage may grow or eventually decline as your life and finances change.
Read Viewpoints: How to get life insurance in 4 simple steps