Term Life Insurance

Term Life Insurance provides a specific benefit at the insured's death to the policy's beneficiary. These policies usually do not accumulate cash value.


  • Rates are generally guaranteed and level for terms of 5 to 30 years.
  • Coverage is generally simple and cost effective for basic financial protection.
  • Most policies can be converted to permanent coverage.
  • Conversion features vary and have different restrictions:
    • Premium credit may be offered at conversion.
    • Conversion may only be available during the level premium period.
    • Conversion may only be to a specific permanent policy.

It’s important to match your need with the type of Life Insurance coverage. Some general considerations:

  • Why are you purchasing the coverage?
    • Replacement of income
    • Pay off debt
    • Fund for children's education
    • Fund for beneficiary's retirement
    • Business Buy/Sell Agreement
    • Estate creation
  • How much coverage do you need?
    • One simple calculation usually is 7-10 times your current income.
    • Another simple calculation is to take the income needed from a lump sum of money given a particular rate of return. For example, if you need $80,000 annual income and expect an 8 percent rate of return on your investment, you would need a $1 million term policy. ($80,000 / .08 = $1 million)
    • PFSI can also run a needs-analysis for your specific situation.
  • How long do you need the coverage? 10, 15, 20, 30 years, or longer?
  • Will you need coverage after the fixed term? If so, how much?
  • What are the financial ratings of the carrier?
  • What are the conversion features?
  • How competitive are the permanent policies that the term can be converted to?


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