Is Term Life Insurance a Waste of Money? 4 Ways to Tell If It’s Right for You

Outdoor photo of a young blonde woman with her young son on her back; for information on Raleigh-Durham term life insurance from John Hunt Insurance.

Many people wonder if term life insurance is a waste of money because it’s active for a limited amount of time—or term. When the policy ends, if you still want coverage, you’ll need another one. So, what’s the point in making the purchase?

Why Choose Term Life Insurance?

Term life insurance isn’t a waste of money. Although it doesn’t accrue cash value, it’s an affordable option when you’re on a budget, need payments that generally stay the same, or need coverage for a limited period.

1. Consider the facts

  • According to LIMRA’s 2019 Insurance Barometer Report, 43 percent of Americans don’t have life insurance.
  • Term insurance is the most common type of insurance that consumers purchase. During the 2019 study period for the LIMRA report, 71 percent of purchasers chose term insurance.
  • A July 2019 mortality trends report published on the Center for Disease Control website indicates that between 2012 and 2017, U.S. death rates increased for all adults between ages 25-44 in all ethnicity and race groups.

2. It’s affordable

  • Term life insurance costs less than whole life insurance, which is active throughout your lifetime.
  • You can purchase life insurance for the years you need it most.
  • Some people purchase term life insurance policies in succession to match the demands of their budget vs. a single permanent policy.

3. Fixed payments

Level term life insurance policies have set payments that don’t increase during the term. When the policy ends, if you decide to purchase a new one, your age, declining health, or the length of the policy will affect the cost.

4. Weigh the financial advantages

If you don’t have adequate insurance, a term life insurance policy isn’t a waste of money. Consider some of the ways that the funds will help your beneficiary:

  • Business purposes
  • Charitable gift
  • Estate taxes/liquidity
  • Pay for burial expenses
  • Pay for college education
  • Pay off mortgage
  • Replace a policy
  • Supplement existing group coverage

What Are the Types of Term Life Insurance?

Three common types of term life insurance include level, renewable, and convertible.


Level term life insurance is available from 10 to 30 years, in five-year increments:

  • 10
  • 15
  • 20
  • 25
  • 30


Features of renewable term life insurance include:

  • Terms are offered in increments of one or five years
  • No need for a medical examination or evidence of the state of your health
  • Age-based premiums


What should you know about convertible term life insurance?

  • Offers the ability to convert to a permanent policy
  • Conversion is available for a limited time
  • Premiums will increase if you convert to a permanent policy

Who Purchases Term Life Insurance?

There are plenty of people who don’t think that term life insurance is a waste of money. It appeals to people with varying backgrounds and circumstances, including:

  • Retirees who want coverage until retirement income is available
  • People who desire supplemental coverage to pay off a mortgage, provide college funds for surviving children, or provide additional income for a spouse
  • Young people who want to take advantage of lower premiums based on their age and good health
  • Anyone on a budget with limited funds for purchasing insurance

How Much Does Term Life Insurance Cost?

Several factors influence the cost of life insurance, including:

  • The amount of coverage required to care for the needs of your survivors
  • Your age and gender
  • Your health history
  • Your family health history
  • Your occupation
  • Your hobbies
  • Whether or not you smoke or use recreational drugs

You can ask for a free quote from multiple sources to compare your options and costs.

Contact Hunt Insurance of Raleigh-Durham, NC for a hassle-free quote.

Read about different types of term life insurance on our blog post, What Happens to Term Life Insurance at the End of the Term?