A life insurance policy’s term length is simply the amount of time the policy lasts.

Common term lengths are 10, 20, or 30 years.

Your term length is based on 3 main factors:

  1. How long will your debts and outstanding liabilities will last? (like if you need to pay off loans or to raise kids)
  2. How much can you can afford? (a longer time period means higher premiums)
  3. How much do you qualify for? (this is based on your age and income)

The term should cover your financial obligations, outstanding debts, and replace your income. If you have a 30-year mortgage, then you’ll likely want a 30-year term so those mortgage payments are protected. If you die during that time, your beneficiaries will receive the death benefit. If you die after your policy runs out and you didn’t get additional coverage or convert your term policy into a permanent policy, your beneficiaries won’t receive the death benefit.

The right term length for your policy depends on the reason you’re buying the policy. People buy term life insurance to protect their family financially in case of an unexpected death. Some life events in which you should consider buying term or additional term coverage are if you recently got married, had a child, bought a house, and if you have any outstanding loans or co-signed loans.

The longer your term length, the higher your monthly premiums will be because a longer term makes it more likely that the insurance company will have to pay out the death benefit.

Most people want a term policy that lasts until their kids are grown, their mortgage is paid off, and when they are close to retirement age.

Choose a term length that allows you to afford your premiums and provide meaningful protection.

What if you develop a health condition during that term?

The advantage of buying a policy with a longer term is that it locks in lower premiums, so if you develop a serious illness during the term, your premiums won’t increase. If you buy a shorter term length and develop the same serious illness, and then you want to apply for additional coverage later, your older age will mean higher premiums, and the new medical diagnosis could mean you’re uninsurable.

When your coverage expires, you should make sure you have enough savings and assets to pay for end-of-life care.

Insurance companies look at your life expectancy. The older you are, the less options you might have, but each life insurance company operates in their own way, so it’s important to talk to an independent life insurance agent about your specific situation.

The Bottom Line

Choosing the right term length is crucial when planning ahead. You want to make sure it covers your financial obligations, debts, and replaces your income for your family. It’s important to work with an independent life insurance agent to find a competitive rate with the best term length and coverage amount.