Consider several factors before deciding how long your life insurance coverage needs to last. Important considerations include how much you can afford, how much you need, how much you qualify for, and how long you’ll have dependents.
If you’ve chosen a term life policy for your life insurance protection, you’re one step closer to protecting your beneficiaries in the event you pass away. You still have a few decisions to make, however, regarding how long you should continue insuring yourself. Consider how much coverage you’ll need (based on information such as the cost of raising a child, your expenses and your income), how much you qualify for and how much you are willing to pay.
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Term length refers to how long you’ll keep the policy in place. In general, term life policies can last anywhere from ten to 30 years, although some life insurance providers offer additional coverage in increments of five to ten years.
If you purchase a life insurance policy with a 30-year term, your beneficiaries will receive the death benefits if you die within those 30 years. If you die after the 30 years is up, there are no death benefits paid. If your children are now grown, but you’re caring for your elderly parents, you may want to extend the term by several years and change the beneficiaries to keep your coverage in place.
Determining the Term Length for You
To calculate how long your term insurance should last, think about why you’re buying it. For most individuals, the purpose is to protect their families financially if the policyholder dies. You want to keep a policy in place for as long as your beneficiaries will need financial support after your death. For instance, if you have young children, a term of at least 20 to 25 years will ensure they have everything they need while growing up and attending school. If you have a 30-year mortgage and want to make sure your family will be able to keep the house, get a 30-year term life policy.
The longer the length of a term life policy, the more the monthly premiums will be because it is more likely you will die, and the insurance provider will have to pay out on the coverage. However, if you purchase a longer term life plan at a younger age, you will lock in the rate you pay. A long term policy also protects you if you develop a health problem after the policy into effect. If you wait until after you’re sick to purchase life insurance, you may not be able to get the coverage you need due to your illness.
Advantages of a more extended Term Life Policy
There are a few good reasons why you might want to buy a term life policy with a longer term. The most obvious reason is the lower cost each month. Your premiums will never be lower than they are right now because you will never be younger than you are right now. As you age, your health will change, and you may develop conditions that will raise your rates. The insurance industry evolves every year, with adjustments to rates that may increase your premiums in the future. Inflation can also have an impact on your premiums, so the time to lock in a quote is now.
Life Throws You Curves
You may look at your finances and what your family will need in the future and choose a relatively short term policy, but that doesn’t guarantee things won’t change. If you add to your family, have your parents move in with you, or end up caring for someone injured or ill, you may want to continue protecting them with a term policy.
You Can Make Adjustments
While it may be tempting to buy a 20-year term policy and add a rider later if needed, this will add costs to what you’re already paying each month. On the other hand, if you buy a 30-year policy now to lock in the lower rate, you can always lower the amount of the death benefit if you no longer need it. This saves you money on the rates both now and later without over-insuring you.
SimpleLife shows you how to adjust your term life insurance coverage easily.
Pricing Life Insurance
SimpleLife has several tables outlining the various rates for individuals based on age, health, and other factors. These will help you get an understanding of what you can afford and how much your premiums will be for the coverage you want. Take a look at the chart below:
To compare how insurance coverage and premiums can change over time. If you are 50 years old and purchase a ten-year term life insurance policy while you are in reasonably good health, you may pay about $65.00 a month to cover you until age 60. That comes to over $7,600. Twenty years down the road, the cost per month will be much higher due to inflation and your age. You might even be uninsurable due to health problems you’ve developed over the years.
If you buy a 30-year term policy when you are in your thirties, you may pay less than $50 per month. While you’ll be paying more in the long run, your monthly, budgeted payments are more reasonable, and you have coverage for years longer. Your coverage will be guaranteed even if you get sick any time during those 30 years.
Not Sure? Contact SimpleLife
If you’re unsure about how much term coverage is right for you and your family, contact SimpleLife. We’re here to help you choose the right life insurance for your family. You need a policy you can live with, and that will fully protect your family from financial harm if you are no longer with them. You can begin with our Life Insurance Calculator to get an estimate and suggestions on what might be best for you.
The next step is to request quotes from specific life insurance providers. The SimpleLife Quote Tool can also help you adjust your coverage options and term lengths to see how your premiums will alter as you age. These tools will ensure you have the right amount of health insurance coverage at the best price for your budget.
SimpleLifes’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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