10 Year Vs. 20 Year Term Life Insurance Review
Many people looking to purchase term life insurance have trouble deciding between a 10 year vs 20 year term life insurance policy. While there are pros and cons to both, this article we break down and review the advantages and disadvantages of both to assist you in choosing the best term policy for your needs.
What is Term Life Insurance?
Before we begin to compare and contrast a 10 year vs. 20 year term life insurance, let’s first explain what term life insurance actually is. Term life insurance provides life insurance protection for a specified period of time. The coverage amount and price are fixed for the chosen term. Term lengths are available in 10, 15, 20, 25 and 30 year increments. With term life insurance, you receive the most amount of life insurance protection at the lowest cost. This is why many of the prominent financial advisors such as Suze Orman, Dave Ramsey and Clark Howard recommend term life insurance over whole life insurance.
10 Year Term
With a ten year term life insurance policy the rates are locked in for the first ten years. After the 10 year term expires the policy continues on but the rates are usually very expensive at this point. This is my most people will apply for a new policy as it will be significantly cheaper. The advantage of a 10 year term policy is the cost. Since the price of term life insurance increases as the term length increases, a 10 year term will be the least expensive. However, the downside in choosing a 10 year term is that this period of time typically isn’t long enough to properly protect one’s family. By choosing a ten year term you run the risk of being uninsurable when the first ten year term expires or if you develop a health condition the premiums may be unaffordable leaving your family at great risk.
Sample 10 year term rates
Age 30-10 year term-$250,000=$10.49 MetLife
Age 40-10 year term $250,000=$12.74 MetLife
Age 50-10 year term-$250,000=$26.73 Protective Life
Age 60-10 year term-$250,000=$69.30 Prudential
Age 70-10 year term-$250,000=$173.14 Royal Neighbors of America
Age 80-10 year term-$250,00=$776.53 EMC National
20 Year Term
A 20-year term is most common term policy in America. This is due to the fact that in 20 years; the kids are adults, a mortgage will be paid down or paid off and one is in a different stage of life with less dependent obligations. Also, by choosing a 20 year term you eliminate the possibly that any changes in your age or health will affect the life insurance during the next twenty years. This will assure that your children and spouse will be protected while they are most reliant on you and your income.
Sample 20 year term rates
Age 30-20 year term-$250,000=$13.56 Banner Life
Age 40-20 year term $250,000=$20.04 AIG American General
Age 50-20 year term-$250,000=$47.84 MetLife
Age 60-20 year term-$250,000=$128.41 Banner Life
Age 70-20 year term-$250,000=$458.50 Transamerica
So which is better 10 year vs. 20 year term?
For most young families a 20 year term will be the best choice. A twenty year term will protect the children until they are legal adults. It also protects your spouse, a mortgage and your paycheck during this time. Although a 10 year term is less expensive, the risk of not locking in the rate for the full twenty years is great, especially if you have young children. With that being said, some life insurance is better than no life insurance. While everyone wants a large policy with rates locked in forever, it all comes down to how much you can afford or want to spend on the premiums. If the cost for the 20 year is too expensive today, then get the 10 year term and protect your family now. If you are healthy you can always purchase additional coverage or apply for a longer term later in the future. The important thing is not to put off getting life insurance. Life happens, people age, health issues develop and people die. Hopefully this review on 10 year vs. 20 year term life insurance will help you choose the best policy to protect your loved ones.
*Rates above are for a male at the preferred plus rating class