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. .
A quarter of respondents from LIMRA’s most recent insurance report cited a lack of knowledge about life insurance policies as a reason they don’t own them — so it’s important to know you can customize your term life insurance policy with a term length that makes the most sense for you. [1]
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What are the different term lengths?
The most popular term lengths are 10, 20, and 30 years. Many people choose a term that’ll cover them while they have the highest expenses, like while they’re paying off a mortgage or raising children. But your term life insurance policy should only last as long as those expenses 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 with every renewal, 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 responsibilities, like a mortgage. This is also a popular choice for parents of very young children.
Other less common but also available term policies include 15-year, 25-year, and 40-year term life insurance.
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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 your beneficiaries wouldn’t struggle to pay expenses without your financial support. 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.
Your age can also impact the term lengths you qualify for. For example, older adults in their 70s aren’t eligible to purchase a 30-year term with most insurers, but they may qualify for up to a 20-year term. Each life insurance company has its own limits, so ask a life insurance agent about your specific situation.
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How does term length affect life insurance rates?
The longer your term length is, the higher your premiums will be. Having a longer term means it’s 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.
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, Legal & General America, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica, and the Policygenius Life Insurance Price Index, which uses real-time data from leading life insurance companies to determine pricing trends. 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 04/01/2024.
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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.
When should you consider a shorter term length?
Not everyone needs coverage for 20 to 30 years or longer — below are a few scenarios when it may make sense to purchase a shorter term.
You’re approaching retirement. If you’re approaching the end of your career, you may only need a 10-year term — or less — to cover those last few years when your salary helps support your loved ones’ lifestyle.
Your children are almost financially independent. If you have teenagers or young adult children, you may only need a few more years of life insurance coverage while they’re still dependent on your income.
Your debts are almost paid off. If you expect to pay off any debt — including a mortgage — in the next few years, it’s smart to buy life insurance to bridge that gap, but a shorter term may be better suited to your situation than a longer one.
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