20- and 30-Year Term Life Insurance Basics
Once you’ve gotten an introduction to life insurance, you’ll have noticed 20- and 30-year term life insurance policies are an attractive, affordable option. But, many people struggle with the actual length of the term they should choose. For some, 10 years is too short, 20 might seem right, 30 could be too much. It all depends on the individual applicant.
For the most part, 20 years is the most common choice, but young insurance seekers often opt for 30 years (and sometimes more when available). The length matters because terms determine how long your coverage will last and when they expire since term-based coverage is not like permanent whole or universal life insurance.
This is all the more reason to think carefully about the length of policy you will choose, but they are based on individual factors. So, here are some ideas and areas to think about when choosing between 20- and 30-year term life insurance.
Looking at Life Insurance Terms Personally
To decide on whether to get 20- or 30-year term insurance, ﬁrst explore why you are seeking an insurance policy in the ﬁrst place. For many, this means facing the reasons they want to protect their loved ones during critical phases of life such as:
- Dependents graduating from college
- Youngest children getting married
- Time to pay off on a mortgage
- Retirement planning
Once you look at some of these milestones, you’ll see how many years out these important events are. From there, you have a better idea of when it might make sense to have a
term-based policy expire. You may want to make sure your children are covered until they ﬁnish school, for example. Or, you could want to stop the possibility of leaving a mortgage to your lower-earning spouse.
Let’s look at a scenario and milestone. Say you’re turning 30 with two young children, and you envision both of them going to college with your help. You might fear that the dream of college could be compromised by an unexpected, early death, changing their lives and threatening their future. If your children are one and two years old, you could by a 20-year term policy to protect them until graduation age.
Otherwise, with the mortgage example, you’d want to protect them from taking on your debt. In that case, as with most mortgage loans, a 30-year term makes the most sense for everyone.
Calculating Terms by Age, Gender, and Price
It makes sense to debate what length of term is sensible for you, your family, and ultimately your chosen beneﬁciaries. Practicing caution and deliberating helps to ensure that you make the right decision about the coverage that you need to achieve your goal of more ﬁnancial safety.
Some might think a longer term is always better, but that introduces more of a commitment that you will have to ﬁnally pay for over the course of a decade if you choose 30 years over a 20-year term policy. At that point in life, you may want to make other investments and life insurance decisions than you could earlier in life.
In addition to that, 20-year term insurance tends to be cheaper than 30-year term insurance because there is a lower chance of mortality according to the insurance company. For a 20-year term, you might pay around $18 as a healthy, non-smoker with $500,000 in coverage at the age of 30. Alternatively, you could pay around $27 for the same policy over a 30-year term.
More Factors for Life Insurance Terms
Another consideration is your own applicant proﬁle. The question is how the details of your health, life, age, and gender can affect your rate and willingness to make the monthly premium commitment. For instance, health issues may matter if you submit to an exam for an insurer, and if you smoke, this could hike prices (making 20-year terms more interesting for some).
Beyond that, age and gender will still be the most important and consequential factors as you consider the life insurance contract and its rate. Though you know that your premium will never change over the life of the policy, it’s still worth thinking about how you might choose a different policy as a smoker, as a woman, as a man, or as someone in their early twenties.
Choose Sproutt for Term Insurance Quotes
Now that you have an idea of how to calculate a life insurance policy term for yourself, you can start getting quotes for your coverage.
Sproutt uses intelligent, online tools to explore the insurance market and generate accurate, helpful quotes. You can use Sproutt to get estimates on what you could pay in premiums for any term length you choose.