Determining the appropriate term length for your life insurance can be challenging. However, understanding how long your coverage should last is crucial.
To simplify this process, let’s explore the factors that influence the duration of term life insurance.
By doing so, we can provide you with guidance and clarity on selecting the right policy length to meet your needs and budget.
Quick Navigation Links
Understanding Term Life Insurance
Term life insurance is a policy that offers coverage for a specific duration known as the term. This period can range from 10 to 40 years.
In the event of the policyholder’s death during this time, their beneficiaries receive a death benefit payout.
Term life insurance is more affordable and easier to understand than whole life or universal life policies.
However, term life insurance only covers you for a specified term and does not accumulate cash value like permanent insurance policies.
When your term life insurance policy ends, you can renew it or convert it into permanent coverage.
Renewing your policy allows you to continue your coverage for another year but can be costly.
On the other hand, converting term to permanent life insurance is a more cost-effective option in the long run. Doing so will give you lifetime coverage with level premiums that won’t increase over time.
⊕
Types of Term Life Insurance
- Level-term: Level-term insurance offers consistent premiums and death benefits throughout the duration of your policy.
- Annually Renewable Term: Another option is ART insurance, which maintains a fixed death benefit while increasing the premium annually.
- Decreasing Term: Decreasing term coverage is also available, with decreasing death benefits over a predetermined period but constant premiums.
Term Length for Life Insurance
Term Length for Life InsuranceLevel premium term life insurance is popular due to its affordability and predictable cost structure.
It’s important to differentiate it from other policies like decreasing term or annually increasing term life insurance.
What does term length mean for life insurance?
Choosing the proper term length is crucial when buying level-term life insurance. The length of your life insurance policy determines how long it will be active and the price you will pay for coverage.
Selecting the correct term length ensures that your financial obligations are adequately covered, providing peace of mind for your loved ones.
Term life insurance plans typically offer a range of term lengths, with age limits for purchasing varying among insurers.
These limits depend on the chosen policy term length and can differ from one insurer to another.
Term Life Insurance Age Limit
Term Life Insurance Age Limit- 10-year: Choose the 10-year term to secure your rate for a decade, suitable for short-term financial needs. It’s available until you turn 80.
- 15-year: Opt for the 15-year term if you require protection for fifteen years; it can be purchased until age 75.
- 20-year: The most common choice for protecting families is a 20-year term policy that can be bought until age 70.
- 30-year: If you desire coverage for thirty years, consider the 30-year, but make sure to purchase it before turning 55.
- 40-year: For individuals under 45 seeking long-term security, the longest-term life insurance is a 40-year plan.
How Long Should Life Insurance Last?
How Long Should Life Insurance Last?To ensure the financial well-being of your loved ones, it is crucial to have life insurance that can replace your income and cover any outstanding debts, such as mortgages.
Financial experts recommend obtaining life insurance coverage worth seven to ten times your annual salary.
Once you’ve determined the appropriate coverage amount, the next step is to consider the length of your policy.
Short-Term vs. Long-Term Coverage
Choosing between short-term and long-term coverage is similar to deciding whether to run a sprint or a marathon.
Both types of coverage have their merits, but the right choice will coincide with your financial responsibilities.
Shorter-term coverage is often more affordable upfront, making it an appealing option for those with temporary financial obligations.
If you have short-term financial needs, policies like annual renewable term, 5-year term, or 10-year term may be suitable.
Remember that if you outlive your term, you will face higher premiums when trying to extend your coverage due to age or potential health issues that arise over time.
On the other hand, longer-term coverage provides greater peace of mind by offering extensive protection against unexpected events in life.
If you have dependents who rely on your income or an outstanding mortgage, opting for a 15 or 20-year term policy might be more appropriate.
For young adults looking to protect their income and cover mortgages throughout their working years, a 30-year term or even 40-year term policy can provide comprehensive protection.
According to Haven Life, these longer-duration policies are highly sought after as they provide extensive protection by paying off the mortgage in case the policyholder dies.
Although these policies typically come with higher initial costs than shorter-term options, they offer locked-in rates that won’t increase as you age or if your health status changes during the insured period.
Comparing term length for life insurance
Before making any decisions, it is crucial to consider the associated costs for different term lengths and coverage amounts.
Take a moment to review the monthly life insurance rates by age, which are available specifically for males.
These quotes include options for 10, 20, and 30-year terms. Women typically receive a twenty percent discount on these rates.
Cost by Term Length for Life Insurance
10-year Term Insurance
| Age | $250k | $500k | $1mm |
| 20 | $11 | $14 | $21 |
| 30 | $12 | $15 | $22 |
| 40 | $15 | $19 | $29 |
| 50 | $24 | $42 | $75 |
| 60 | $62 | $113 | $214 |
| 70 | $172 | $319 | $610 |
20-year Term Life Insurance
| Age | $250k | $500k | $1mm |
| 20 | $13 | $21 | $35 |
| 30 | $15 | $22 | $37 |
| 40 | $19 | $30 | $55 |
| 50 | $43 | $79 | $146 |
| 60 | $115 | $211 | $406 |
| 70 | $409 | $819 | $1,577 |
30-year Term Life Insurance
| Age | $250k | $500k | $1mm |
| 20 | $19 | $31 | $53 |
| 30 | $20 | $32 | $58 |
| 40 | $30 | $53 | $99 |
| 50 | $66 | $125 | $252 |
Ultimately, there is no one-size-fits-all solution for everyone. Selecting the correct term length involves understanding your specific requirements and balancing sufficient coverage and affordable premiums that fit your budget constraints.
Consider laddering your policies if you want to save money or are uncertain how long your term life insurance should last.
By implementing a life insurance ladder, you can customize your coverage to adapt to changing circumstances.
This strategy involves purchasing two policies with varying term lengths, enabling you to allocate protection where necessary while minimizing expenses.
Do You Need Term Life Insurance Quotes?
- Select Duration
- Select Amount
- Press Get Quote
Picking a Term Life Insurance Length
Picking a Term Life Insurance LengthThe internet has revolutionized how we buy life insurance, allowing us to easily compare quotes from different companies without leaving our homes.
Your overall health is a crucial factor in determining your insurance costs. For healthy applicants with limited time, no-exam coverage offers a convenient option.
Instead of undergoing a medical exam, you’ll have a brief phone interview. If you meet the eligibility requirements, this option can be as affordable as fully underwritten term policies.
However, it’s important to note that individuals with pre-existing conditions or those seeking significant death benefits should consider taking an exam instead.
Most insurers require a medical examination during the application process to assess potential risk factors affecting your premium rates.
Having positive results from the medical exam can lead to lower premiums, while developing chronic illnesses may result in higher costs for your coverage.
Besides cost, selecting a highly-rated life insurance company is important when buying term coverage.
Review the financial strength ratings of insurers provided by independent agencies like A.M. Best or Standard & Poor’s. These ratings offer valuable insights into an insurer’s ability to pay claims.
Additionally, customer service rankings should be considered to indicate policyholders’ satisfaction with their provider’s responsiveness and level of service.
Affordable Life USA can connect you with many top-notch companies offering policies that can be tailored to your specific needs.
We work with reputable life insurance companies with excellent ratings from trusted organizations like the Better Business Bureau, AM Best, and J.D. Power.
Best Term Life Insurance Companies
| COMPANY | BBB | AM Best | JD Power |
|---|---|---|---|
| AIG | A+ | A | 718 |
| AXA Equitable | A+ | A+ | 752 |
| Banner Life | A+ | A+ | N/A |
| Brighthouse | A+ | A+ | N/A |
| Guardian Life | A+ | A++ | 760 |
| John Hancock | A+ | A+ | 739 |
| Lincoln Financial | A+ | A+ | 744 |
| Mass Mutual | A+ | A++ | 780 |
| Metlife | B- | A+ | 780 |
| Mutual of Omaha | A+ | A+ | 766 |
| Nationwide | A+ | A+ | 806 |
| Pacific Life | A+ | A+ | N/A |
| Principal Financial | A+ | A+ | 774 |
| Protective | A+ | A+ | 742 |
| Prudential | A | A+ | 770 |
| SBLI | A+ | A+ | N/A |
| Transamerica | A+ | A+ | 720 |
FAQs: Term Life Insurance Duration
FAQs: Term Life Insurance DurationWhen should you get life insurance? Life insurance is a dependable safeguard that shields your loved ones from unexpected hardships. It becomes essential when starting a family or taking on financial responsibilities like mortgages and debts.
Should I get 20 or 30-year term life insurance? A 20-year term policy is excellent for shorter financial obligations, while a 30-year life insurance plan is better suited for longer debts like mortgages. However, the cost of a 30-year term policy is higher.
How long do life insurance policies last? The duration of a life insurance policy varies depending on the coverage type. Term life insurance offers protection for a set period, while permanent life insurance provides lifelong coverage.
How long should you have life insurance? To ensure adequate coverage, choose a term life insurance policy that matches the duration of your most extended financial commitment. For example, if you have a 30-year mortgage or young children, opt for a 30-year policy.
Do you get money at the end of my term life insurance? Typically, term life insurance policies expire without any refund. But by paying extra, you can opt for a return of premium rider that will reimburse all the premiums paid at the end of your term.
When should you stop term life insurance? Consider ending your policy once you’ve paid off major debts and your dependents are financially self-sufficient. Prioritize securing their future.
Popular Term Life Insurance Topics
-
Affordable Life USA is dedicated to providing comprehensive life insurance solutions to families and business owners throughout the United States.
For over thirty years, our agency has provided a platform for comparing hundreds of life insurance policies without the stress of high-pressure sales tactics.
Our experienced team of financial planners has helped thousands of clients obtain affordable coverage through our efficient online application process.
Our founder, Eric Van Haaften, expanded our consumer-centric sales model nationally by leveraging the influence of renowned publications such as Time, Newsweek, and The Wall Street Journal.
Eric acquired his love for quantitative analysis while getting his business degree from Ferris State University, which provided a solid foundation for his analytical approach to financial planning.
Eric Van Haaften, LUTCF
1-877-249-1358
