10 vs 15 vs 20 vs 25 vs 30 Year Term Life Insurance Policy [Ultimate Guide]

10 vs 15 vs 20 vs 25 vs 30 Year Term Life Insurance Policy [Ultimate Guide]

The two main decisions that have to be made when purchasing life insurance is the amount of coverage to carry and the length of time to have the protection in place. When speaking someone for the first time, one of the first things I do is a needs analysis. This helps us determine your current and future expenses as well as calculate future income earnings to determine the money that would be lost if you were to pass away prematurely. This post; 10 vs 15 vs 20 vs 25 vs 30 Year Term Life Insurance Policy is going specifically address the second part of the equation, the length of time you and your family will need the coverage.

Answers to Frequently Asked Questions on Term Life Insurance

The shorter the term the lower the price. This is due to the fact that there is less risk for the insurance company. There is less of a chance the insurance company has to pay out the death benefit in 10 years vs 15 years vs 20 years vs 25 years vs 30 years.

Level term life simply means the rate is fixed for the term you select.

Term life insurance policies are unilateral contracts (a contract in which only one party makes an enforceable promise, in this case the insurance company). This means the you can cancel the policy anytime without a penalty, however the insurance company cannot cancel the policy on you or increase the rate for the term you select.

Term life insurance is pay as you go, similar to auto insurance. You can pay month-to-month, quarter-to-quarter, semi-annual or year-to-year.

Term life insurance polices cover every type of death, natural causes and accidents from day one, no waiting period.

Term life insurance does not cover suicide in the first two years.

Most term life insurance policies have the option to convert the policy to permanent life insurance.

Choose a company with an Excellent or Superior rating from A.M. Best.

10-Year Term Life Insurance Policy

The shortest term available for most life insurance companies is a 10-year level term. A 10-year level term simply means the rates are fixed for the next 10 years and will not increase regardless of your age or health.

Pros:

  • Lowest priced term policy.
  • Rates are locked in for 10 years.
  • You can cancel anytime without a penalty.
  • Covers natural causes and accidents from day one.

Cons:

  • If you need life insurance beyond 10 years, it will cost more to reapply when the term expires since you will be 10 years older. Also, if your health changes during the term, the rates for a new policy would be even more expensive. Also, if you have a significant health event during the term, you run the risk of becoming uninsurable if you reapply after 10 years when the term expires.

Sample 10-Year Term Life Insurance Rates

Age$100,000$250,000$500,000$1,000,000$2,000,000
30$7 $10$14$19$33
40$8$12$17$23$43
50$14$24$41$70$135
60$29$59$110$209$382
70$86$169$316$598$1,191
80$252$620$1,235$2,354$4,543
*Based on excellent health,male,monthly rates

15-Year Term Life Insurance Policy

The second shortest term available is a 15-year level term. This simply means the rates are fixed for the next 15 years and will not increase regardless of your age or health.

Pros:

  • Rates are locked in for 15 years.
  • Second lowest priced term policy.
  • You can cancel anytime without a penalty.
  • Covers natural causes and accidents from day one.

Cons:

  • If you need life insurance beyond 15 years, it will cost more to reapply when the term expires since you will be 15 years older. Also, if your health changes during the term, the rates for a new policy would be even more expensive. Also, if you have a significant health event during the term, you run the risk of becoming uninsurable if you reapply after 15 years when the term ends.

Sample 15-Year Term Life Insurance Rates

Age$100,000$250,000$500,000$1,000,000$2,000,000
30$8$10$15$21$40
40$9$13$20$34$63
50$18$30$41$103$200
60$37$76$143$279$553
70$120$247$475$934$1,863
80N/AN/AN/AN/AN/A
*Based on excellent health,male,monthly rates

20-Year Term Life Insurance Policy

The most common term is the 20-year level term. This is due to the fact the prices are very affordable and any dependent children will be adults when the term expires. Also, many people will be self-insured or closer it in twenty years. The rates are fixed for the next 20 years and will not increase regardless of your age or health.

Pros:

  • Rates are fixed for 20 years.
  • Most common term policy.
  • Ideal for parents to have coverage until their children are adults.
  • Ideal for a mortgage.
  • You can cancel anytime without a penalty.
  • Covers natural causes and accidents from day one.

Cons:

  • If you need life insurance beyond 20 years, it will cost more to reapply when the term expires since you will be 20 years older. Also, if your health changes during the term, the rates for a new policy would be even more expensive. Also, if you have a significant health event during the term, you run the risk of becoming uninsurable if you reapply after 20 years when the term ends.

Sample 20-Year Term Life Insurance Rates

Age$100,000$250,000$500,000$1,000,000$2,000,000
30$9$12$19$31$57
40$10$17$27$47$87
50$21$38$71$134$262
60$52$105$201$388$771
70$203$407$790$1,519$3,033
80N/AN/AN/AN/AN/A
*Based on excellent health,male,monthly rates

25-Year Term Life Insurance Policy

Some carriers offer a 25 year level term policy. This means the rates are fixed for 25 years. However, the 25-year term doesn’t always have the best pricing, compared to either a 20 year or 30 year term. Also, the rates are fixed for the next 25 years and will not increase regardless of your age or health.

Pros:

  • Rates are fixed for 25 years.
  • You can cancel anytime without a penalty.
  • Covers natural causes and accidents from day one.

Cons:

  • Not always the most competitive pricing.
  • If you need life insurance beyond 25 years, it will cost more to reapply when the term expires since you will be 25 years older. Also, if your health changes during the term, the rates for a new policy would be even more expensive. Also, if you have a significant health event during the term, you run the risk of becoming uninsurable if you reapply after 25 years when the term ends.

Sample 25-Year Term Life Insurance Rates

Age$100,000$250,000$500,000$1,000,000$2,000,000
30$11$15$25$43$81
40$15$24$42$78$150
50$31$57$103$200$396
60$96$203$385$686$1,367
70N/AN/AN/AN/AN/A
80N/AN/AN/AN/AN/A
*Based on excellent health,male,monthly rates

30-Year Term Life Insurance Policy

One of the other most common term lengths is the 30-year level term. This term length is ideal for those that want protection for the next thirty years until the house is paid off, the children are grown and has the coverage in place until retirement age. The rates are locked in for the next 30 years and will not increase regardless of your age or health.

Pros:

  • Rates are fixed for 30 years.
  • Ideal for your younger families and to cover a new mortgage.
  • You can cancel anytime without a penalty.
  • Covers deaths from natural causes and accidents from day one.

Cons:

  • More expensive than the shorter terms.

Sample 30-Year Term Life Insurance Rates

Age$100,000$250,000$500,000$1,000,000$2,000,000
30$11$18$29$52$99
40$15$28$50$94$184
50$35$67$128$245$485
60N/AN/AN/AN/AN/A
70N/AN/AN/AN/AN/A
80N/AN/AN/AN/AN/A
*Based on excellent health,male,monthly rates

Additional Policy Options Beyond Term Life Insurance

For those who are looking for permanent insurance, a great policy option is called a guaranteed universal life (GUL). This policy is similar to a term policy but lasts longer since you set the age when it expires. The rates and death benefit are fixed as long as you make your premium payment on time. You can set the length of the policy to age: 90, 95, 100, 105, 110 or age 121. Just as in term insurance, the longer the fixed rate, the higher the premium. These rates are available on the quoter on this site called To Age 90, 95, 100, 105, 110 and 121.

Life Insurance Client Examples

Example #1

40 year old male- married and has 2 children, ages 3 and 5 years old. He also has a mortgage for $450k with 26 years left. He is an engineer and makes $115k a year and his spouse is a teacher and makes $55k year. This client chose a $1.25 million 20 year term policy. Since he is making extra mortgage payments and maxing out his 401k every year as well as investing in the stock market, he said he should be self-insured by age 60. Also, the kids will be out of college. His premium was $61 month or $718 a year. His wife, who is 38 and also in excellent health, chose a $750k 20 year term policy for $31 month/$378 year.

Example #2

55 year old male- married, children are grown. He has a mortgage with 14 years left and plans on retiring between the ages 65 to 70. Has equity in home, 401k, savings and mutual funds. He chose a 15 year term policy to protect his future income until retirement and to cover the mortgage until it’s paid off.

Example #3

32 year old husband and wife- they have a one year old child and the wife is pregnant expecting their second child. They also just bought a new home. They both chose a 30 year term policy.

Example #4

A 45 year old female- a physician is starting her own practice. She took out a $1 million SBA Loan and needed life insurance to cover the SBA loan requirement. She took out a $1million 10 year term life insurance policy. Once she was approved, we helped her with the collateral assignment form.

Infographic- life expectancy for life insurance

10 vs 15 vs 20 vs 25 vs 30 Year Term Life Insurance Policy- Final Thoughts

Trying to decide on which term to select can seem overwhelming at first glance. No one knows how long they’re going to live. When comparing a 10 vs 15 vs 20 vs 25 vs 30 year term life insurance policy, the good news is that if you do a simple needs analysis and work with an experienced agent, you can be confident in choosing the right term to protect your beneficiaries.

When it comes to term life insurance, most Americans are looking to protect their spouse, children, mortgage and future income if they were die prematurely. Life insurance is there to replace that paycheck that would have been there so your loved ones can continue the same lifestyle and carry on a normal life. Ideally, at a certain time in the future, the children are grown, the house is paid off and you are retried and no longer need to have life insurance since you will become self-insured. You will have assets, social security, other investments and money in the bank for you and your spouse to live on.

Term life insurance is also ideal for many businesses. It is the preferred life protection policy for: to cover an SBA Loan, key-person coverage, buy-sell agreement and business succession. It is also commonly used for divorce decrees to protect the breadwinner in the agreement.

As mentioned, the great part about term life insurance policies is that they are unilateral contracts (a contract in which only one party makes an enforceable promise, in this case the insurance company) and you can cancel the policy anytime without a penalty. However, the insurance company cannot cancel the policy on you or increase the rate for the term you select. You can simply pay as you go, month-to-month, quarter-to-quarter, semi-annual or year-to-year.

In closing, life insurance, works almost like magic. It creates money where none existed before. Life insurance provides dollars (death benefit) for pennies (premium) apiece as well as provides peace of mind for you and your beneficiary.

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