How Long Should I Have Life Insurance?
When buying life insurance, you’ll need to decide how long your policy will last. How long do you need life insurance?
Unlike permanent life insurance, like whole life and universal life insurance- term life insurance won’t cover you for your entire life.
You will get to pick how long your life insurance policy lasts by choosing the term length. The term that you choose will depend on your coverage needs.
Term life insurance has several popular term lengths that you can choose from. The most common terms are 10-year term, 20-year term, and 30-year term. You’re not limited just to those.
There are other terms available such as 15, 25, 35 …, and even a 40-year term.
A 10-year term is a short-term coverage. It’s sometimes used to cover unplanned situations.
- For example, maybe you refinanced your home or have some other debts that are only for a few years.
- Perhaps you have a 10-year business loan that your lender requires life insurance to cover.
- Maybe you have a health condition that will make long-term coverage unaffordable. A 10-year term can be purchased until your health improves and can get a better rate.
A 20-year term is a popular choice for young parents looking to provide coverage until the kids are grown and out of college. It’s also good for anyone who has less than twenty years on their mortgage.
A 30-year term is typically the longest term available for every life insurance company. For all other companies, a 30-year term policy will give you the longest term coverage. It’s a popular choice for newlyweds and young professionals. It’s also a great choice for the breadwinner of the family.
Banner is the only life insurance company to offer level premium coverage for up to 40 years! Banner OPTerm 40-year term is a great option for anyone needing long-term coverage but at affordable rates.
To figure out how long your term life policy should last, you need to be aware of why you’re buying terms. Are you near retirement and only need short-term coverage? Are you younger and need income replacement for the next 30 years? Your specific goals for coverage will help determine your coverage length.
Factors Affecting Insurance Terms
Some coverage is better than nothing. Make sure you purchase a cheap term life insurance policy that you can afford. Don’t buy a policy that will be difficult to pay for consistently. You don’t want to pay for a policy that will end up lapsing in a few years.
How old are you now? How old will you be when your term life policy expires? Will you need another policy after your term is done? Your age plays a big role in your rate. It’s important to figure these things out now so there aren’t any huge surprises later on.
What are your major goals for coverage? Are they to cover short or long term needs? Do you just need a simple policy to cover your funeral and burial expenses? Perhaps you’re a millionaire and need a policy to avoid estate taxes or leave an inheritance. There are many goals for life insurance and they will help determine how long your policy should last.
Do you have a mortgage? How much time is left until it’s paid off? Make sure your policy covers the length of your mortgage as this is often your biggest asset and liability.
Do you know when you’re retiring? Will your life insurance policy be needed when you retire? If you’ve saved and invested for retirement, your life insurance needs will be different compared to someone who hasn’t.
Permanent Life Insurance
Do you need life insurance to cover you for your entire life? If so, term life isn’t the answer. A permanent life insurance will provide you lifetime coverage, and you’ll have a few options to choose from.
Universal Life Insurance
You can purchase a policy to a specific age with Guaranteed Universal Life insurance (GUL). With a GUL policy, you pick an age that the policy will cover you. For example, you can buy guaranteed universal life insurance to ages 90, 95, 100, 105, 110 and 121.
GUL is a great option for older shoppers too. One of the best ways to use GUL is when you’re at an age where a 30-year term is not available. This happens with most companies in your 60s.
Whole Life Insurance
Whole life insurance has its place, but it will be the most expensive life insurance policy. Whole life will provide you lifetime coverage and a level premium. It’s a good option for cash value growth, estate planning, and for high-net individuals.