Term Life Insurance

Term life insurance covers you for a set period, often 10, 15, 20, or 30 years, and pays a death benefit to your beneficiaries if you die during that term. The premium is usually level for the whole term, there is no cash value, and when the term ends the coverage ends unless you renew it or convert it. For most California households it is the least expensive way to put a large death benefit in place for the years that someone depends on your income.

Schneiderman Insurance Agency writes term coverage for families and business owners across the San Fernando Valley and greater Los Angeles. This page covers what we review with each of them, including the protections California law builds into every life policy issued here.

What happens to the premium when a level term ends?

It rises, and often sharply. A 20-year level term policy holds its premium for 20 years. In year 21 most policies become annually renewable, and the renewal premium is set by your age at that point rather than your age at issue. The jump can be several times the level premium. That is not a defect; it is how a level term is priced, with the early years subsidizing the later ones. It does mean the term length should match the length of the need, so that the policy is finished when the mortgage or the child-raising years are. California’s advertising rules require a policy with non-level premiums to have the change described plainly, and that is why we say it here rather than at renewal.

Can I convert term to permanent coverage later?

Usually, within a window. Most term policies carry a conversion privilege that lets you exchange the term policy for a permanent one from the same insurer without new medical underwriting. The privilege ends at a stated age or a set number of years into the term, and after that a health change since issue can put permanent coverage out of reach. The conversion deadline is written in your own contract, and it is the date worth putting in a calendar the day the policy arrives. Read the conversion clause before comparing two term quotes on price alone, because a longer conversion window is worth paying for if permanent coverage is a real possibility later.

What does California law guarantee on a term policy?

Four things that apply to every individual life policy issued or delivered in this state, whatever the carrier. The policy must be incontestable after it has been in force for no more than two years during your lifetime, except for nonpayment of premium, under Insurance Code section 10113.5. It must carry a grace period of at least 60 days from the premium due date, during which it stays in force, under section 10113.71. It cannot lapse for nonpayment unless the insurer has mailed notice at least 30 days before the lapse date to you and to a person you designated to receive it, under section 10113.72. The insurer must give you the form to name that person before the policy is issued. And you have a free-look period of at least 10 days after delivery, 30 days if you are 60 or older. During that period you can return the policy for a full refund under section 10127.9 and section 10127.10.

The lapse-notice designee is the one most people skip. Naming a spouse, an adult child, or a trusted friend means a missed premium during a hospital stay or a move does not quietly end the coverage. It costs nothing and it is on the application.

These Insurance Code provisions are as published by the California Legislative Counsel at the time of writing. The Legislature amends them from time to time, and that office publishes the current text.

Who can own a term policy, and who can be the beneficiary?

You have an unlimited insurable interest in your own life under section 10110.1, and you may make the policy payable to whomever you choose, whether or not that person has an insurable interest. A policy on someone else’s life is different: the owner needs an insurable interest in that life at the time the policy is taken out. Spouses, dependents, and business partners with a written agreement generally have it. Under section 10130, a policy can later pass by transfer, will, or succession to someone without an insurable interest, so a policy taken out correctly can move as your circumstances change.

Who buys term life insurance?

Parents covering the years until children are grown and supporting themselves. Homeowners who want the mortgage paid off if they die before it is. Households replacing income during the peak earning years. Business owners funding a buy-sell agreement or key person coverage for a defined period. Anyone who wants a large death benefit now and expects the need to end.

What affects the premium?

Age at issue, the term length, the death benefit, your health and medical history, tobacco use, and the underwriting class the carrier assigns. Term is medically underwritten, so the same face amount can be priced very differently between two applicants and between two carriers for the same applicant. We compare more than one carrier because the classification of your health history is not the same everywhere.

How do we help with term life insurance?

We start with how long the need lasts and how much would still need paying, then match the term length and face amount to that rather than to a round number. We read the conversion clause and the renewal schedule with you, and we confirm the lapse-notice designee form is filled in. If you want your premiums returned at the end of the term, the return of premium term page explains the tradeoff. The wider picture, including permanent options, is on our life insurance page and the types compared page.

Every household is different, and this page does not replace a review of your own situation. To start, request a quote below or call 818-322-4744.