Posted On: Jan. 16, 2018
How Long Should My Life Insurance Last?
People buy life insurance policies for all kinds of reasons. Sometimes, a whole or universal life policy intended to provide coverage for the insured's entire life is best. In other cases, life insurance needs have a shorter duration. The length of time your term life insurance policy should last will depend on your unique financial circumstances and goals.
The following frequently asked questions and answers may help you determine what duration of term life insurance policy you should look for. Of course, your independent insurance agent is another valuable resource to help you make insurance decisions that make sense based on where you are today, and your anticipated future situation.
What are my options for choosing a life insurance policy duration?
When it comes to the choices available, you can generally find term policies in durations from as short as five years up to 30 years, and in five-year increments in-between.
The cost for a 30-year policy will generally be higher than the cost of a five-year policy. That's because the insurance company's risk of having to pay policy benefits goes up as you age.
What if I'm buying insurance for a financial obligation with a different duration than available policy terms?
One popular reason for buying term life insurance is to provide funds to pay off the outstanding balance on a home mortgage in the event the homeowner dies prematurely. If you still have 26 years of payments left on your mortgage, you will want to evaluate options and may want to consider a term life policy with coverage for 25 or 30 years.
What is Annual Renewable Term coverage?
Some insurance companies also offer annual renewable term life insurance policies. Those policies may allow you to guarantee coverage for a longer time period (such as ten or twenty years), but the premiums will generally go up every year based on your new attained age. If you are trying to cover a short-term financial obligation, annual renewable term may be a good solution. In most cases though, you'll pay less over time by purchasing standard term life insurance policies
What are some reasons for buying Term Life insurance policies?
One common reason for buying term life insurance is to provide funds that your beneficiary could use to pay off your outstanding mortgage balance. Because mortgage payments are generally a significant financial burden, life insurance can provide relief for your loved ones so they would not have to worry about how to continue paying the mortgage.
If you have minor children, you may also want to buy term life insurance that would provide coverage until they are out of the house. If you were to die prematurely, your term life insurance policy proceeds could allow your spouse or significant other to continue supporting the children even though your income would no longer be there.
People also often purchase term life insurance as an income replacement tool, designed to provide a safety net for your loved ones if you were to die before reaching retirement. Many people find that their life insurance needs decrease when they enter retirement, because their financial obligations have lessened and they are no longer supporting minor children.
Converting from Term to Permanent coverage
When you are considering term life insurance policies, ask your independent insurance agent whether you would have the option to convert the policies to permanent coverage at a later date, if it made sense to do so.
With convertible term policies, you will not need to provide evidence of insurability when you convert. You may also even be able to keep the same "preferred" rating class, even if your health has worsened. Converting to permanent coverage later in life can be expensive, compared to term life. If you think you might need more long-term or ongoing life insurance coverage, you should talk to your insurance agent about buying a whole life or universal life policy now.
Let Symmetry Financial Group Help You Evaluate Your Life Insurance Options
At Symmetry Financial Group, our independent insurance agents will work with you to help you determine your insurance needs and goals. Then, we'll work within your budget to find coverage to help you protect what's most important to you. To learn more and to get insurance quotes, contact us online or call us at (877) 285-5402.