When buying a term life insurance policy, you’ll need to decide how much coverage you need, and how long your coverage will last. You can tailor your term length to your personal financial responsibilities — whether that’s children, a mortgage, or insuring your income until retirement.
How long is term life insurance?
Most life insurance companies offer term lengths of 10, 20, and 30 years, but you can also find shorter and longer terms — ranging from one to 40 years. You can tailor your term life insurance policy to last as long as you need it for your personal situation.
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What are the different term lengths?
The most popular term lengths are 20 years and 30 years. Many people choose a term that’ll cover them while they have the most financial responsibility, like while they’re paying off a mortgage or raising children. But your term life insurance policy should only last as long as your financial obligations and outstanding debts.
Here are the most common term lengths, from shortest to longest.
Annual renewable term life insurance: An annual renewable term policy is a one-year life insurance policy with an option to renew once per year. Your premiums increase every year you renew your policy, so in the long term, these policies are costlier than traditional term life. But annual renewable term life can be a good option for someone who’s trying to improve their health or habits to qualify for a more affordable policy in the near future.
5-year term life insurance: Not all insurers offer five-year terms, but a policy with this term length can be good for people looking to cover temporary financial obligations, like a car or business loan.
10-year term life insurance: A 10-year term life insurance policy is a good option for older adults who don’t have responsibilities like young children, but still need coverage for a shorter time period.
20-year term life insurance: A 20-year term life insurance policy is the most popular term length option. It’s great for parents or single-income families.
30-year term life insurance: A 30-year term life insurance policy is great for people with long term financial obligations, like a mortgage. This is also a popular choice for parents of very young children.
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How to choose the right term length
The right term length for you will depend on why you’re buying a life insurance policy in the first place. Below are a few of the main considerations to take into account when shopping for your policy.
A mortgage: New homeowners can consider a 30-year term, since that’s how long many mortgages last. Even if you’ve taken out a 20-year mortgage, the extra years can help you if you refinance or your circ*mstances change.
Co-signed loans: Whether it’s a private student loan for your child or a business loan with a partner, your life insurance policy should outlast those debts so that your co-signers can keep up with payments.
Children: If you’re a new parent, you need coverage for as long as your children are financially dependent. That can be anywhere from 20 to 30 years if you plan to support them past the age of 18 or help pay for education.
Expenses until retirement age: Your life insurance policy should ideally last until you no longer have any major financial obligations. For many people, this financial independence occurs at the age of retirement, when their children are out of college and their mortgage is paid off.
Policy length limits can also impact how much coverage you get. Older people often can’t get term life insurance coverage beyond age 85. Each life insurance company has its own limits, so ask a life insurance agent about your specific situation.
Choosing between term and permanent life insurance
For many families, term life insurance is the most convenient type of policy due to its flexibility and cost. On the other hand, if you have dependents who’ll require lifelong care or long-term financial obligations, your family might be better off with a type of life insurance that doesn’t expire, such as whole life or universal life insurance.
Permanent life insurance policies are, however, many times more expensive than term.
A licensed life insurance agent at Policygenius can work with you through the application process so you’re getting coverage from the best insurer for your circ*mstances at the most competitive price and the right term length for you.
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How does term length affect life insurance rates?
The longer your term length is, the higher your premiums will be. This is because a longer term makes it more likely that the insurance company will have to pay out a claim.
For example, a 30-year-old female who doesn’t smoke could pay about $23 per month for a 20-year, $500,000 term life policy. But she’d pay about $34 per month for a policy with the same payout and a 30-year term.
As a licensed insurance agent, I would almost always advise clients to apply for a term that would cover them at least through retirement age — as long as they could afford it. A longer term brings more financial security.
Age | Gender | 10-year term life policy | 20-year term life policy | 30-year term life policy |
|---|---|---|---|---|
20 | Female | $17.39 | $22.65 | $30.97 |
Male | $22.52 | $30.20 | $40.53 | |
30 | Female | $16.71 | $22.98 | $34.52 |
Male | $21.13 | $29.32 | $42.45 | |
40 | Female | $23.98 | $35.27 | $54.87 |
Male | $29.28 | $42.94 | $68.28 |
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Methodology: Average monthly rates are calculated for male and female non-smokers in a Preferred health classification obtaining a 10-year, 20-year, or 30-year, $500,000 term life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Brighthouse Financial, Corebridge Financial, Foresters Financial, Haven Life, Legal & General America, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica. Rates may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 01/01/2024.
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Why should you consider a longer term length?
Once you evaluate your financial obligations you can determine exactly how long your term life policy should last. But there are a few reasons it may be worthwhile to choose a longer term for your policy.
Your rates are lower now than they’ll be in the future. Life insurance rates increase every year we age, because we get riskier to insure as we grow older. But once you buy a policy, your premiums will stay the same for the entire length of your term. Buying a 30-year term now will save you money in the long run, compared with buying a 20-year term and then another 10-year term when the first expires.
You’ll be ready for the unexpected. If you take on more financial obligations in the future, you know your coverage will last. Life events like changing careers, having another child, or needing to take care of aging parents can all impact your life insurance needs.
You can lower your coverage amount if you need to. Over time, your financial situation may change and it may make sense for you to reduce your coverage. Most insurance companies allow you to lower your coverage at least once over the lifetime of the policy. On the other hand, if you need to increase your coverage by buying a new policy, it’ll be more expensive. You’d also likely need to take a new medical exam.
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Frequently asked questions
What does term length for life insurance mean?
Your coverage ends when your term life insurance policy expires. If you outlive your policy’s expiration, your beneficiaries can’t file a claim. You can shop for a new policy or convert to permanent life insurance if you still need coverage.
How long is term life insurance?
A term life insurance policy typically lasts 10, 20, or 30 years. Some insurers offer longer or shorter term lengths between five and 40 years.
What happens to term life insurance when it expires?
Your coverage ends when your term life insurance policy expires. If you die after your policy’s expiration, your beneficiaries can’t file a claim. You can shop for a new policy or convert to permanent life insurance if you still need coverage.
What is a coverage gap?
A coverage gap is when you need life insurance protection, but don’t have enough (or any at all) in place. If you were to die without enough life insurance coverage in place, your loved ones could struggle financially.
