Term Life Insurance: Common Mistakes to Avoid

Think of term life insurance as a safety net. Done right, it catches your family if the unthinkable happens. Done wrong, it leaves holes big enough for financial disaster to slip through. Many people make costly mistakes—not because they don’t care, but because they didn’t know what to look out for.

Term life insurance is one of the most affordable and practical ways to protect your family’s future. For a relatively low monthly premium, you lock in a tax-free death benefit that covers mortgages, daily living expenses, or even college tuition if something happens to you. But too often, families are left vulnerable because of overlooked details. The good news? These mistakes are easy to avoid once you know them.

1. Buying Too Little Coverage

It’s tempting to grab a policy with a small payout just to “have something.” But according to LIMRA, 44% of households would face financial hardship within six months if the primary wage earner died. A $100,000 policy might cover funeral costs but won’t replace years of income. A better rule of thumb: aim for 10–12 times your annual income.

2. Waiting Until Later in Life

The younger and healthier you are, the cheaper your premiums. A healthy 30-year-old man pays about $18/month for a $250,000, 20-year term policy, while the same coverage at age 50 jumps to over $50/month. Waiting doesn’t just cost more—it risks health changes that could make you uninsurable.

3. Picking the Wrong Term Length

A 10-year term may sound affordable, but what if your kids are still in school when it expires? One real example: a father bought a 10-year term at 35. By the time it ended, he was 45 with two kids in high school. His renewal premium more than quadrupled, eating into his retirement savings. Choosing a 20- or 30-year term upfront would have saved thousands.

4. Ignoring Renewal and Conversion Options

When your term ends, your premiums can skyrocket—sometimes 5–10 times higher. Smart buyers review their policy mid-term, explore conversion to permanent coverage, or purchase a longer term at the start.

Term life insurance is simple, affordable, and powerful—but only if you set it up correctly. Avoid underinsuring, procrastinating, choosing too short a term, or ignoring renewals. Done right, it provides the peace of mind every family deserves: knowing they’ll be financially secure no matter what tomorrow brings.