Life insurance term length options
Term life insurance helps protect your loved ones if you die, and there’s a lot to consider when choosing your coverage. Your age and your goals for the next few years may affect your choices, as well as whether you have a mortgage, other debt or kids. With so many factors, it can be tough to know where to start.
Here are a few things to consider when choosing the best term length for your unique situation:
Short-term life insurance (5 to 10 years)
Choose a shorter term if:
- You’re not sure what life milestones lie ahead, so you need flexibility. (You’ll be able to renew or extend your coverage later.)
- You’re looking for a low-cost insurance policy.
- You want to take advantage of your younger age and health to get a good rate.
- Your mortgage took longer to pay off than you planned, or your kids aren’t financially independent yet, so you need coverage to bridge the gap.
Medium-term life insurance (11 to 20 years)
Choose a mid-length term if:
- You’ve chosen a shorter amortization period on your mortgage, or you’re already several years into your mortgage.
- You want to provide protection for your children until they’ve finished school or start working full time.
Long-term life insurance (21 to 50 years)
Choose a longer term if:
- You’re looking for coverage for a longer period, to cover you through milestones like getting married, having children or buying a house.
- You’ve bought a house and want the insurance coverage for the duration of your mortgage, instead of buying mortgage insurance.
- You have young children and want to make sure they’re taken care of until they’re financially stable.
- You want coverage that lasts until you retire, and you want premium payments that stay the same throughout your working life.
Factors that determine the cost of term life insurance
- Age – Generally life insurance is less expensive when you’re young and get more expensive to purchase as you age.
- Gender – On average, women live longer than men so insurance for women may cost less.
- Health – A family history of certain medical issues, chronic disease and even smoking can increase the cost of your life insurance.
- Occupation – If you have a dangerous job such as a police officer or firefighter, you’ll likely pay more for life insurance.
- Interests – If you enjoy high-risk pursuits such as rock climbing or sky diving, you may pay more for life insurance.