Although buying term life insurance can be very convenient with an online life insurance agency like Haven Life, there are still a few questions to consider before securing coverage. One of those questions is: how long do I need coverage for?
As a starting point, remember that term life insurance is exactly that, coverage for a certain “term” or period of time. Once the term ends, your coverage ends. That makes it important to select the proper length of coverage from the get-go. You want to make sure your family has coverage during the years they need it most. And, choosing the right term length from the beginning can save you money down the road.
What is a term length?
Typical term lengths are 10, 15, 20, or 30 years. The right term length will cover your family during the years they need it most — until your kids are out of college or your mortgage debt is paid off.
Additionally, the amount of coverage you buy and the term length will have a direct impact on the price of your term life insurance policy. For example, a 30-year term will cost more than a 20-year policy.
An online life insurance calculator can help give you an idea of what term would best meet your needs. It will take into consideration factors such as your age, your income level, whether you have children, their ages, and your debt outlook.
A 30-year term length is a popular choice because of the longer-term coverage it offers. But, is it right for you? Let’s find out.
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“I have a 30-year mortgage”
A 30-year term life insurance policy is a great option for families carrying a, you guessed it, 30-year mortgage. Or, who have somewhere between 20 and 30 years to go. (Since a 25-year term isn’t a common length.)
On a monthly basis, most of us pay more toward housing costs than any other category of expense. If something should happen to you before the mortgage is paid off, your policy could help your family continue to make the monthly mortgage payments or help cover the balance.
“I’m a newlywed”
An online life insurance calculator will usually recommend a 30-year term policy for young, married individuals. Why? It’s likely you both rely on each other for some kind of financial contribution – whether it be for large bills like mortgage or other small day-to-day expenses. If you and your partner are in your early 30s, a 30-year term can protect both of you until your early 60s, which is why both spouses need coverage.
“I’m the primary breadwinner”
Being the primary breadwinner is a big responsibility. Whether your spouse earns an income or not, your family likely relies on your income for their financial well-being. For young families, a 30-year term policy can be an ideal choice to help protect your income until your children are adults and your partner is at or near retirement.
(BTW – even if your spouse is a stay-at-home parent and doesn’t technically earn a salary, they probably still need life insurance. Learn why.)
“I have a special needs child”
While many parents can get away with a 20-year term length, which will often cover their family until the kids are in college, those with a special needs child should consider longer coverage. Term life insurance offers an affordable way to help financially protect your family while you’re busy saving away for emergencies, retirement and other financial needs. For those with a special needs child who may need lifelong care, a 30-year term buys parents more time to set up a financial plan for his or her future.
“I have substantial debt”
Although housing and family obligations make up the bulk of most family’s monthly expenses, don’t forget to factor in other debts when deciding on a term length. Some debts are usually forgiven if you were to die — like federally funded undergraduate loans. However, some privately funded loans will be left to your co-signer or spouse if something happens to you.
Substantial student loan debts from graduate school can follow you for years or decades if you’re paying the minimum amount each month. Make sure, no matter which term length you choose, that your term length lasts until those debts are expected to be paid off.
A real-life example of needing a 30-year term
I have a little less than 30 years before I plan to retire. I am also in the 23rd year of my 30-year mortgage. The decision to purchase a 30-year term policy was easy for me.
I knew a 20-year policy wouldn’t quite cover our needs. And, I wasn’t comfortable with the risk of leaving my family financially exposed should I pass away before the mortgage is paid off. Although I knew that I could apply for another short-term policy at the end of those 20 years, I also know that my rates will be higher when I am older.
In addition, since none of us has a crystal ball, I couldn’t say without a shadow of a doubt that I would be insurable after 20 years. What if I develop severe health problems in the future that make me uninsurable? WIth 30 years of coverage, I can rest easy knowing that, should I pass away, I’ve taken steps to provide for my family financially, now and in the future. It’s a comfort knowing that.
Advantages of 30-year term life insurance policies
Lots of people could benefit from a 30-year term policy based on their life circumstances. Along with the peace of mind that all life insurance brings, 30-year term policies offer other considerations, chief among them that you are locking in a set premium for the entire period of time the policy is in effect. This level price makes a 30-year policy a pretty smart (and affordable) buy for those who need coverage for a longer period of time.
Imagine if you could have locked in some of these prices 30 years ago:
- Gallon of gas: $0.91
- Movie ticket: $3.50
- Average new car: $10,400
Not too bad, right?
Here are premiums that non-smoking adults at different ages might pay for a 30-year term life insurance policy:
- 30-year, $500,000 policy for a healthy 30-year-old man: $34.10 per month
- 30-year, $750,000 policy for a 35-year-old woman in excellent health: $45.13 per month
- 30-year, $1,000,000 policy for a 35-year-old woman in excellent health: $45.13 per month
- 30-year, $500,000 policy for a 25-year-old woman in good health: $25.26 per month
Is a 30-year term just right for you?
When it comes to buying term life insurance, choosing the right term length helps ensure that your family is adequately protected. A 30-year term, in particular, provides a “better safe than sorry” length of protection that can last until the kids are adults, the mortgage is paid off, and you and your spouse are enjoying retired life. It also gives you many, many years having affordable life insurance coverage in place, so you can focus on other things besides insurance, like building a financial safety net that many of us don’t have in our 20s, 30s, and 40s.
With the help of online calculators and through an analysis of your family’s needs, you can determine whether a 30-year term life policy is right for you. No matter what policy you choose, know that you are taking a step in the right direction to financially protect the people you love most.
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Rachel Parisi is a freelance writer and attorney. She focuses her writing on insurance, financial services, and employee benefits. In her previous life, she served in the United States Air Force as a missile combat crew commander (think ‘Wargames’). Opinions are the writer’s own.