logo 1
Call: (301) 901-0065

What is Term Life Insurance and How Does it Work?

Fidelity Life’s term life insurance provides affordable coverage to fit your budget, with flexible options to meet your life’s changing needs.

Importance of understanding term life insurance

Life insurance can provide a pillar of security for anyone’s financial plan. However, you may be one of the 65% of uninsured people who don’t invest in protection because they don’t know what type of life insurance policy to buy or how to purchase term life insurance to protect their family’s future.

Exploring the key reasons for investing in a life insurance policy can empower you to choose the kind of life insurance and options you will be happy with. You’ll be able to communicate clearly and make the best decisions when you speak with a life insurance agent.

Take a quick, deep dive into the differences between the two major types of life insurance and learn why term life insurance is the easiest, most relatively inexpensive way to get started.

What is term life insurance, and how does it work? It’s critical to have a good understanding of term life insurance because your knowledge will save you money while bringing peace of mind. You’ll have the insurance policy that’s right for you at an affordable price.

Life insurance can help your beneficiaries have the needed funds, so you won’t have to worry about where the money will come from to pay the bills if your family is left without your income.

When you’re armed with accurate information, you can easily sort through the many options, make an informed decision, and choose the type of life insurance plan best suited for you. Any misconceptions you may have will disappear.

Misconceptions and lack of knowledge

Life insurance can be a confusing topic filled with unfamiliar choices, which often causes people to put off learning about it and investing in coverage. However, the sooner you inform yourself to dispel misconceptions and take action to lock in a policy, the lower your monthly payments may be throughout the years to come. This is because the monthly premiums you pay for coverage increase every year you wait. The younger you are when you get life insurance, the less expensive a life insurance policy may be. Have you heard any of the below common misconceptions about life insurance?

Life insurance is too expensive.

Unfortunately, two-thirds of younger people believe life insurance costs are prohibitive. One-third believe that they need to pay over $1000 monthly. Actually, healthy young women can have term life insurance for under $20 monthly. Even healthy 70-year-old men can get coverage for under $100 a month.

I already have insurance through my employer.

Taking advantage of group insurance rates through your employer is wise because premiums are often free or very low, and they come directly out of your paycheck. However, there are several factors to be aware of.
  • You may lose coverage if you switch jobs.
  • Employer-sponsored plans usually top out at three or four times your salary, so you’re probably not getting enough coverage.
  • As your age advances, health conditions may develop, increasing premium costs if you need to take out more insurance later.

I’m too busy to get life insurance.

In today’s world of instant communication, you no longer have to visit a life insurance agent and a medical care practitioner and then wait weeks for underwriting. Now, you can shop online or by phone and get covered almost instantly. These tips will guide you through the process.

Savings are better than life insurance.

Savings are important. However, there are two problems with relying on savings to protect your family. First, it’s nearly impossible to save enough to cover all family expenses for years. Second, what is your family going to do if you depart during the years it takes to build up savings?

With term life insurance, coverage begins immediately. In exchange for a relatively small amount each month, your family can have access to the necessary funds if an unexpected event occurs. For example, a healthy 30-year-old woman can have $250,000 of coverage with a 10-year term policy for only $15.01 a month.

Curious? Calculate your premium expense now.

Understanding what term life insurance is — and why life insurance is so important — is vital for financial planning to protect your loved ones’ future.

Understanding term life insurance: definition and purpose

How does term life insurance work? Life insurance supports your family after you die by paying out death benefits to your partner, children, or aging parents. While there are two popular types of life insurance — whole life insurance and term life insurance — the definition and purpose of both are the same.

Definition of life insurance

When you purchase life insurance, the life insurance company agrees to pay the person(s) of your choice the agreed-upon amount if you die while you are covered. This amount is called a death benefit.

You choose the amount of the death benefit for both whole life and term life insurance policies. The death benefit can typically be up to 2 million dollars. The larger the death benefit is, the higher your monthly premiums will be.

The purpose of life insurance is financial protection for dependents

Both types of life insurance provide peace of mind to the policyholder by guaranteeing financial protection for loved ones as long as you pay the premiums. In the event of your untimely death, your dependents will have the funds they need to cover:

  • Debts like home mortgages, credit cards, or student loans
  • Day-to-day living expenses
  • Any medical or final expenses
Scroll to Top
forney family life (1)

Finalexpensedirects

  • +123 456-7890
  • mail@example.com
  • 123 Fifth Ave, NY 12004, USA.

Term Life Insurance Calculator

Curious about the amount of life insurance that would give you the financial security you need? A few pieces of information can help you determine what coverage might work best.
Just answer 10 or so questions about your debt, savings, expenses, etc. and we’ll show a personalized estimate for a payout amount for your consideration. Try our term life insurance calculator, then get a quote for whatever amount you decide is best for you and your family.

Fidelity Life Association Named One of America’s Best Insurance Companies for 2026

Fidelity Life Association is proud to announce its inclusion in Forbes’ America’s Best Insurance Companies 2026 ranking. This prestigious recognition, made in collaboration with Statista, the leading statistics portal and industry ranking provider, was revealed on September 24, 2024, and can be accessed on Forbes.com. The America’s Best Insurance Companies 2025 ranking is based on an independent survey of over 18,000 U.S. citizens. Participants evaluated insurance providers they had interacted with in the past three years across six key dimensions: Advice, Customer Service, Price/Performance, Transparency, Digital Services, and Damage/Benefit Service. Survey respondents rated their companies on satisfaction, loyalty, and overall recommendation. These ratings were converted into scores, which were aggregated to determine rankings across five insurance types including Permanent Life and Term Life. Fidelity Life Association is honored to be recognized among the best in the industry as part of this esteemed list. Statista’s comprehensive research and analysis reflect its commitment to providing reliable data and insights across various sectors, making this recognition even more significant. We are proud to be recognized for the third year in a row and remain committed to delivering innovative products that enable everyday Americans to access life insurance coverage quickly, easily, and affordably.