What life insurance term length is right for you?

Life insurance policy term lengths

Term life insurance is one of the simplest and most affordable types of life insurance. Because of that, it’s no surprise that it’s a popular choice for many families.

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 should choose a term length that will cover your family during the years they rely 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 the right one for you. For example, buying coverage while you’re young and healthy will get you the most affordable rates. Additionally, buying the amount of coverage and term length that you actually need will save you money over the long-term. 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 premiums.

So how do you answer the question, “how much life insurance do I need?” A simple way 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 is a great 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.

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Newlyweds

One group of people who can 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 will also last most 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. 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.

New homeowners

Speaking of milestones like getting married, another big step in life is buying a home. Most 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. In fact, in a survey we did last year, we found that Millennial parents spend 42% their income on housing and childcare alone. If you should happen to pass away before your mortgage is paid off, your 30-year term life insurance policy can could be utilized by your family to help pay off the mortgage or to continue paying the monthly note.

Breadwinners

Primary breadwinners should also consider a 30-year term. Why? Because if your partner relies on your income for their financial stability, you’ll want a term length that lasts him or her to near or at retirement. The proceeds of your life insurance coverage can help replace your income, making things easier for 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 is no. Your life insurance term length should last 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, chances are you may need 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.

Keep in mind that there’s no magic age at which your children will become financially independent. A Pew Research Center analysis earlier this spring showed that the number of young adults who live with their parents continues to rise, even among young adults who have finished college and are employed. If that trend continues, your children may be dependent longer into adulthood than you were.

How much does a 30-year term length policy cost?

A 30-year term length can be very affordable. Here are premiums that non-smoking adults in excellent health might pay for a 30-year term life insurance policy at different ages:

  • 30-year, $250,000 policy for a 30-year-old man: $21.91 per month
  • 30-year, $500,000 policy for a 35-year-old woman: $33.53 per month
  • 30-year, $750,000 policy for a 35-year-old man: $57.38 per month
  • 30-year, $1,000,000 policy for a 30-year-old woman: $49.38 per month

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 and to make sure that mortgage is paid in full or will be paid off soon. 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 usually most important when you have children. And, both spouses should consider 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.

Parents often find the 20-year term length optimal for their families. Yes, I also just said that the 30-year term length can be ideal for parents. Both the 20-year and 30-year term options could be a great choice 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?

Cost-conscious

In general, if you are cost-conscious, a 20-year term policy may be your choice. Term life insurance in general 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,” part of picking the right term length is about saving yourself a dollar here and there where it makes sense. It’s better to have a smaller safety net than no net at all, so look for a policy that you can afford 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 offers a layer of protection for the debts you’d leave behind.

“When my husband and I got married (we were 42 and 40), we each bought a $250,000 20-year term life insurance policy because that was about how long we thought we needed to meet our financial goals. Nine years later, we are right on target with the projections we made.” Kim R., San Diego CA

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 ensure you pick a term length that helps protect the ones you care about.

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Retiring within 20 years

Look at your retirement outlook next. If you think you will be retired or close to retirement in 20 years, 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 premiums that non-smoking adults in excellent health might pay for a 20-year term life insurance policy at different ages:

  • 20-year, $250,000 policy for a 30-year-old man: $13.83 per month
  • 20-year, $500,000 policy for a 35-year-old: $19.33 per month
  • 20-year, $750,000 policy for a 35-year-old man: $30.51 per month
  • 20-year, $1,000,000 policy for a 30-year-old woman: $29.63 per month

Who might need a 15-year term length?

The 15-year term length policy can be an optimal choice for some families.

Parents

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 can be the sweet spot. Nobody said raising children is cheap. In fact, a recent 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 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 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 could be a great cushion.

Homeowners with a mortgage

Who else can benefit from a 15-year term policy? Once again, mortgage holders can match their remaining mortgage obligation with a term length that helps financially protect their family in the event they pass away. If you have a 15-year mortgage or have whittled your longer-term mortgage to 15 years or less, 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 help him or her remain in your shared home.

Closing in on retirement

Let’s talk about those lucky people who are 15 years or less away from retirement or general 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 that could help your loved ones still be able to enjoy the benefits you worked for together.

How much does a 15-year term length policy cost?

Here are premiums that non-smoking adults in excellent health might pay for a 15-year term life insurance policy at different ages:

  • 15-year, $250,000 policy for a 30-year-old man: $11.18 per month
  • 15-year, $500,000 policy for a 35-year-old woman: $16.10 per month
  • 15-year, $750,000 policy for a 35-year-old man: $22.97 per month
  • 15-year, $1,000,000 policy for a 30-year-old woman: $23.55 per month

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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 great 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 definitely 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 against that debt until it’s paid in full.

Parents

Once again, parents are in the mix. Parents with pre-teen children in middle school could 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 may find that a 10-year term helps cover that gap of coverage until they are full-fledged adults.

Retiring or financially independent within the decade

Even when you’re so close to retirement you can smell it, a term life insurance policy can make a lot of sense. 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 is worth looking into. The same goes if you will otherwise be financially independent in 10 years of less.

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 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 transitioning to a longer-term policy and enjoy premiums that reflect your better health.

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Laddering strategy

A 10-year term length can also be a critical piece of an insurance laddering approach. More on that below.

How much does a 10-year term length policy cost?

Here are premiums that non-smoking adults in excellent health might pay for a 10-year term life insurance policy at different ages:

  • 10-year, $250,000 policy for a 30-year-old man: $10.53 per month
  • 10-year, $500,000 policy for a 35-year-old woman: $13.09 per month
  • 10-year, $750,000 policy for a 35-year-old man: $18.58 per month
  • 10-year, $1,000,000 policy for a 30-year-old woman:: $19.33 per month

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Policy laddering

Sometimes one term life insurance policy can’t provide the exact coverage you need – maybe you buy a new house or have another baby (surprise!). That’s okay.

Instead of canceling a policy or putting off coverage until these milestones (unexpected or otherwise) occur, consider laddering coverage over time. You can have multiple policies – a 10-year policy with mortgage protection in mind and a 20-year policy to provide coverage while your children are young. In 10 years, when you expect the mortgage to be paid off, the shorter policy won’t be needed, but you’ll still have 10 more years remaining on the longer policy to help financially protect your children.

It may seem confusing at first, but a laddering strategy across multiple policies or carriers can give you the best of both worlds: locked-in low rates based on your current age along with term lengths that meet your specific needs, so you aren’t paying for too much coverage.

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 simplest and most affordable types of life insurance. Therefore, choosing a term length should also be uncomplicated.

Several factors go into choosing the right life insurance policy 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 tools, educational resources, and excellent customer support representatives, that can help you along in the decision making process.

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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’).

Haven Term is a Term Life Insurance Policy (ICC15DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Not all riders are available in all states. Our Agency license number in California is 0K71922 and in Arkansas, 100139527.

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