Term life insurance is one of the simplest and most affordable types of life insurance. Because of that, it’s no surprise that it can be a solid choice.
When shopping for a term life insurance policy, you’ll need to decide what term length to purchase. Term life policies are usually available in increments of 10, 15, 20 or 30 years. You’ll want to consider a term length that will cover you during the years your family relies on you financially, which is usually when you have children in the house, limited assets or savings, and co-signed or shared debts (like a mortgage).
Not only is term life affordable, but there are also a few ways to save on your policy when you’re choosing which one may be right for you. For example, the younger and healthier you are when buying coverage, the more affordable your term life insurance rates will be. Additionally, buying the amount of term life insurance coverage and term length that you actually need will save you money over time. It’s easy to default to “more is better,” but keep in mind that more coverage and a longer term length will cost you more in monthly term life insurance premiums.
So how do you answer the question, “how much life insurance do I need?” A simple way of choosing a term life insurance policy length is to let an online life insurance calculator do the work for you. It will take into consideration your age, income, debts and family structure to provide you with a suitable recommendation for a term length and coverage amount.
But, if you’d like to learn more about what term length people like you choose, read on.
Who might need a 30-year term length?
A 30-year term length can be a good choice for many people. Why? Because this is often the longest term available and provides your family with a safety cushion for an extended period of time. When you are young and have many milestones ahead of you, both financial and personal, a longer term length can buy you the flexibility that many young families need. So, who may be a good candidate for the 30-year term length? Any of the following.
One group of people who may benefit from a 30-year term length is couples who recently married.
Deciding to share your life with a partner is an exciting milestone filled with promise. You have someone with whom you’ll create a home, travel, and share your best memories.
Along with all of those perks come shared financial choices and obligations that you’ve, well, promised to help with. If you share debts with your partner, like a new mortgage, then consider a term length that would last until those debts are paid off. For most people, 30 years checks that box and provides a layer of financial protection for your loved one. It can also last many young married couples to near retirement.
Another bonus for young married couples is that since they are young and healthy, they usually get some of the best life insurance rates available.
“When we got married, both my husband and I bought 30-year, $500,000 policies from Haven Life Insurance Agency. My life insurance premium is about $28 per month. We didn’t have shared financial obligations yet (other than rent), but we both knew that if anything happened to us, we’d want to leave the other better off financially. We chose a 30-year term life insurance policy to last us near retirement and to cover the length of the mortgage we knew we’d have soon. We’re both 30 years old and have peace of mind in knowing we have a back-up plan for the next 30 years while we’re building substantial savings and retirement accounts.” – Brittney Burgett, communications director at Haven Life.
Speaking of milestones like getting married, another big step in life is buying a home. Many people choose a 30-year mortgage and that makes, you guessed it, a 30-year term length for life insurance an excellent match.
Most of us earmark the largest portion of our earnings for housing expenses. If you should happen to pass away before your mortgage is paid off, your 30-year term life insurance policy could be used by your family to help pay off the mortgage or to continue paying the monthly note.
Primary breadwinners may also want to consider a 30-year term. Why? Because if your partner relies on your income for their financial stability, you’ll probably want a term length that lasts him or her to near or at retirement. The proceeds of your life insurance policy can help your better half to carry on without you. When you retire, your income no longer comes from working, so you may not need as much coverage. But, while you’re young and healthy, a 30-year term length could provide much-appreciated peace of mind while you’re building a substantial financial cushion.
Parents of young or special needs children
We love our children and want to do anything to protect and provide for them. Therefore, it’s important to consider your family’s financial situation if you were no longer around. Could your partner independently afford childcare and fulfill your plans to pay for college? If your family relies on a stay-at-home parent for caregiving, could you afford to take on childcare and the many other tasks they contribute to the household? For many young parents, the answer may be no. If so, consider a life insurance term length that lasts at least until your children are adults or are through college (depending on what your plans are for financial contributions).
If you haven’t had children yet but are planning to, you might want a 30-year policy to protect against the unexpected while your family grows from welcoming new babies to sending them off to college. Additionally, if you are the parent of a special needs child, a 30-year term policy can be a good choice, no matter the age of your child. For those with a special needs child who may need lifelong care, a 30-year term allows you more time to set up a financial plan for his or her future.
How much does a 30-year term length policy cost?
A 30-year term length can be affordable. Here are term life insurance premiums for men and women in excellent health for a 30-year life Haven Term policy, issued by MassMutual, at different ages:
|Source: Haven Life|
Who might need a 20-year term length?
A 20-year term length is the most popular choice with Haven Term policyholders. For many of our customers who are in their early to late 30s, 20 years is just enough time to cover the kids until they are adults or until the mortgage is paid or nearly paid. These individuals are also able to save a little money because a 20-year term costs less than a 30-year term length policy.
Parents of young children
Yes, “parents” are in both the 20-year and 30-year sections because term life insurance is an affordable way to put an amount of coverage in place to protect their children in the event one or more parent were no longer there. Both spouses may want to consider getting a policy. If you have a newborn, a 20-year term length will help provide a financial safety net for that child until they are 20 years old. For those who are more risk averse and want wiggle room, they may opt for the 30-year term length. Whichever you choose, both are solid options for young families looking to leave a legacy.
Both the 20-year and 30-year term lengths could work well for people with younger children. How do you know which to pick? Consider the following:
- What kind of debt are your carrying?
- How long do you have until retirement?
- How risk-averse are you?
- How important is the monthly cost of coverage to you?
In general, if you are cost-conscious, a 20-year term policy might be your choice. Term life insurance is affordable, but you do pay more for a 30-year term policy than you would for a 20-year term. If you are a bit older when you purchase your policy, that price spread can be even more attractive when comparing a 20-year term versus a 30-year term because costs increase as you age.
At the end of the day, life is expensive, and every little bill adds up. While it’s important to not sacrifice your family’s financial future over “what ifs,” you are in the best position to choose the right term length for you and your family’s protection needs. If cost is an issue, it’s better to have a smaller safety net than no net at all. Look for a policy term length that you feel you’ll be able to pay for over the years.
Those with debts
When it comes to your estate it’s near-impossible to make sure your loved ones only inherit the good stuff: if your house still has a mortgage on it, you’ll be giving that, as well as the property, to your executor to handle. Should you leave behind an art collection and the private loans you took out when you studied art, one may need to be sold to pay the other.
Death is hard enough on a family. You wouldn’t want to leave your loved ones with debts to repay without your assistance. Whether it’s 10 more years on your student loans or 28 more years on that mortgage, it’s good to make sure that the term length you choose will last long enough to help pay for the debts you’d leave behind.
When thinking about debts, keep in mind “non-traditional” debt scenarios that could affect your loved ones if you pass away. Have your parents co-signed for your mortgage or your business loan? Do you and your partner maintain separate financial accounts, but nonetheless rely on one another to pay certain bills? Make sure you cover all of the bases when considering what kind of debt horizon you have. That exercise will help you pick a term length to help protect the ones you care about.
Retiring within 20 years
Look at your retirement outlook next. If you think you will be retired or close to retirement in 20 years, you might consider a 20-year term to provide a cushion of coverage until you reach that milestone.
You and your family are unique. Factors like your kids, projected retirement age, mortgage balance and debt all play into how long you will need life insurance coverage. For many folks, a 20-year term is a solid option. It lasts until young children are grown, is cost-effective, and can travel with you into retirement. Make it your goal to secure the right amount of coverage for the right number of years when you’re researching life insurance policies.
How much does a 20-year term length policy cost?
Here are term life insurance premiums for men and women in excellent health for a 20-year life Haven Term policy at different ages:
|Source: Haven Life|
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Who might need a 15-year term length?
The 15-year term length policy can be an appealing choice for some families.
Some parents benefit from choosing a 15-year term length. If your kids are in preschool or elementary school and you plan to send them to college, 15 years might be the sweet spot because the policy would cover them until they reach college age. Nobody said raising children is cheap. In fact, a 2017 study found that raising a child born in 2015 through the age of 17 will ring up to a whopping $233,610 … and that does not include college costs. With numbers like those, a 15-year term life insurance policy looks very attractive. That term won’t break the bank and provides solid insurance protection for your family.
Caregiver for aging parents
Financial protection from life insurance isn’t just about your spouse and the kids. There has also been an increase in the number of people who care for their aging parents in their homes. While it’s impossible to know for sure if you’ll be in that situation in the coming decades, it’s worth considering what your plans are for the possibility of caring for aging relatives currently or in the future. If you expect you’ll need to financially assist these family members, then a 15-year term length that lasts until something like Social Security kicks in for them could help pay for their care if you were no longer there.
Homeowners with a mortgage
Who else might benefit from a 15-year term policy? Once again, mortgage holders can match the years remaining for their mortgage obligation with a term length that helps financially protect their family in the event they pass away before the mortgage is paid off. If you have a 15-year mortgage or have whittled your longer-term mortgage to 15 years or less, you might want to take a look at a 15-year term policy. If your loved one loses you, it is truly a thoughtful gift to give a financial safety net that could be used to help him or her pay the mortgage..
Closing in on retirement
Let’s talk about those lucky people who are 15 years or less away from retirement or, from financial independence. First of all, kudos to you. It takes hard work and steady planning to get to the point where you are. Now that you’re there, keep making great decisions and make sure you have protected your family for that in-between period before full financial independence is realized. A 15-year term policy could help bridge that gap. If the unexpected happens and you pass away, you will have provided financial support for your loved ones to help bridge that gap.
How much does a 15-year term length policy cost?
Here are term life insurance premiums for men and women in excellent health for a 15-year life Haven Term policy at different ages:
|Source: Haven Life|
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Who might need a 10-year term length?
When you hear someone mention a 10-year term life insurance policy, you might think to yourself, I’ll take my chances. What are the odds I’ll actually need coverage for such a short period of time? But if you’re like me and use a “better safe than sorry” approach when it comes to protecting your family, a 10-year term length can be a good idea.
It’s true that some life insurance needs have more of a long-term nature: you’re at the beginning of your mortgage, you’re the primary breadwinner early in your career, you’re a newlywed or a new parent. But there are also situations on the other end of the timeline that could benefit from a 10-year term of protection.
Your mortgage took longer to pay off than expected
Life can be complicated, and it’s highly likely things will change over the course of 20 or 30 years. Perhaps you moved and bought a new home after a couple years into your mortgage, you upgraded the size and location of said home, or you needed to do some refinancing. All of these actions could result in the fact that your term life insurance policy no longer lasts until your mortgage is paid off. For those prudent financial decision makers, that might signal a need to purchase a shorter-term life insurance policy to help protect those you leave behind for the extended years of the debt.
Once again, parents are in the mix. Parents with pre-teen children in middle school might benefit from a 10-year term length, which would provide for coverage through their kids’ college years or young adulthood. Additionally, sometimes life throws you the delightful surprise of another child, if you bought a term life insurance policy before the youngest child was born, you might find that a 10-year term could offer protection during that gap of coverage until they are full-fledged adults, should you not be there.
Retiring or financially independent within the decade
Even when you’re so close to retirement that you can smell it, a term life insurance policy might still make a lot of sense in some situations. You still have some risk and financial needs, but your time horizon has shrunk all the way down to 10 years. If that sounds like your timeline to retirement, a 10-year term length may be worth looking into. The same goes if you anticipate that you’ll otherwise be financially independent in 10 years or less, and want to put some insurance protection into place should the unexpected happen during that time period.
You need less expensive coverage while getting healthier
A 10-year term life insurance policy can be a savvy strategy as you work toward overall financial goals. If you’re not at your healthiest right now, for example, you smoke, you’re overweight or you struggle with high blood pressure or cholesterol, you may already know that your life insurance premiums are going to be much higher than they would be for a healthier person.
Instead of leaving your family unprotected while you work towards getting healthier before purchasing a longer-term policy, consider a 10-year policy to help bridge that gap. The shorter-term policy will be less of a hit on your budget but will offer a layer of financial protection for your loved ones. When you’ve gotten yourself healthier you can look into purchasing a longer-term policy and enjoy premiums that reflect your better health.
How much does a 10-year term length policy cost?
Here are term life insurance premiums for men and women in excellent health for a 10-year life Haven Term policy at different ages:
|Source: Haven Life|
Whatever length you choose, you are making a great move for your family
When choosing term length, it’s important to keep in mind that that term life insurance is intentionally meant to be one of the simpler and more affordable types of life insurance. Therefore, choosing a term length should also be uncomplicated.
Several factors go into choosing the right life insurance policy and coverage term for you. Your family structure, age of dependents, financial goals, debts, and budget will all ultimately play into which term length best serves your needs. These needs may change a bit over time, too, and that’s OK.
Fortunately, there are many online life insurance quote tools, educational resources, and excellent customer support representatives, that can help you along in the decision making process.
It’s not just easier life insurance, it’s an easier life.
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