Do you ever find yourself walking around thinking, “What the heck is a term length?”
However, if you’re in the market for a life insurance policy, that question will come up at some point. You will soon have more questions when you realize that life insurance term lengths come in a variety of shapes and sizes.
No need to fret, though. Finding the right term length for your financial situation is actually pretty easy with all the online tools available.
If you’d like to go the quick and simple route, you can try our life insurance calculator. Based on your needs, it will offer a recommendation for your policy amount and term length.
If you want a deeper understanding of what goes into determining the right term length for you, we respect that. And, as avid online researchers ourselves, we’ll give you a more thorough explanation.
First, let’s start with some basics.
What You NEED to Understand About Term Life Insurance
Overall, life insurance helps ensure that your family would be financially secure if you died. In an ideal world, you’d know it’s there, but never need to use it – much like a good emergency fund, or that fancy china you really needed to put on your wedding registry but hate cleaning.
Term life insurance, which is what we sell, is one of the least expensive types of life insurance out there. It offers you the ability to choose coverage for a set number of years, with most insurers providing term lengths of 10, 15, 20, 25, and 30 years. As long as you keep up with your premium payments, you’re covered for that many years.
Choosing a Term Length
The right coverage and term length for you and your loved ones depends on a few key financial factors. When choosing a life insurance term length, you need to consider the following:
What is your financial situation?
Do you have a mortgage, student loans, or any significant debt that would fall to your loved ones?
Does your partner work, or does he or she rely on you as the breadwinner?
If you identify with any of the above scenarios, it’s important to consider how much longer you’ll have these financial obligations (not to call your husband a financial obligation, of course) and which policy length would give you ample time to pay off the debt.
The best rule of thumb is to secure a term length that won’t end before the debt is paid off. For example, if your mortgage is for 25 years, don’t get 20 or 25 years of life insurance — consider a 30-year life insurance term length in case you have to extend your mortgage due to unexpected tough times.
Similarly, if you’re only a year or two away from paying off your debt (congratulations!), consider a shorter 10 year term length to help you transition into a stable financial situation.
If you have no debt, no dependents, and extensive savings already in place, you may not even need life insurance. Yes, we said it, you may not need life insurance… yet.
What are the needs of your dependents?
How much income would your dependents need if you’re not around? We’ll give you a hint and tell you the rule of thumb is at least 6 to 10 times your annual salary.
If you have children, think about what your children will financially need until they are adults. Childcare, tuition, and other educational expenses are often at the top of that list. If you’re nodding your head to all of those, and your kids are under 10 years old, then you likely need at least a 20-year term length cover them until they are no longer relying on your income.
Don’t forget that “dependents” isn’t limited to just your kids. A non-working spouse or an elderly parent you care for are also dependents to consider. Ask yourself if your spouse will be able to cover their day-to-day living expenses, or if your elderly relative, will be financially secure on their own.
Considering all of your dependents’ financial needs will help you determine how many years of coverage you need to help keep them protected.
As you can see, there is quite a bit to consider when determining the right term length for you. Fortunately, technology makes it A LOT easier to come upon an informed decision.
Let’s use it to your advantage.
Use our life insurance calculator to receive a recommended policy amount, term length and find out how much it’ll cost you per month. From there, you can get covered in about 20 minutes, should you choose to go with the Haven Term* policy.
Then, you can just get back to your regularly scheduled life.