Term life insurance policies are sold in different lengths, ranging from five to 40 years, with the most common terms being five, 10, 15, 20, 25, and 30 years. The longer the term, the higher the premiums are likely to be because of the rate lock-in and the increased likelihood of health problems as you age. However, annual renewable term life insurance is also available, which guarantees your ability to renew coverage annually for a set period without reapplying, but premiums typically increase upon renewal.
|Term Length||Who it’s a Good Fit For|
|Annual Renewable Term Life||People with short-term financial obligations or those who want to cover a gap in employment until they get a new group life insurance policy through their next job.|
|5-Year Term Life Insurance||People with short-term financial obligations, such as a small loan or college fees.|
|10-Year Term Life Insurance||Parents or guardians with older children who still rely on their income, or someone approaching retirement who needs to cover the last leg of their employment.|
|20-Year Term Life Insurance||New parents or newlyweds who want to cover their growing family’s income.|
|30-Year Term Life Insurance||People who want to cover large, long-term financial obligations, such as a mortgage or college debt, or young applicants who want to cover the majority of their earning years.|
If your longest-lasting financial obligation falls in between available term periods, round up to the nearest term length. When choosing your term length, consider your mortgage, children’s dependency, and retirement savings. Ideally, your life insurance coverage should not expire before your mortgage is paid off, your children are self-sufficient, and you have retired with sufficient savings.
When it comes to buying life insurance, it is essential to make an informed decision based on your financial obligations and future plans.
- Breeze. When Should You Get Life Insurance?
- Life Happens. What Is Term Life Insurance?
- uphelp.org. When Should You Get Life Insurance?
- Bankrate. How Term Life Insurance Works
- Forbes. Term Life Vs. Whole Life Insurance: Differences And How ...