Choosing the Correct Term Life Insurance Policy Length

When you buy life insurance, you probably have an idea in mind about where you want your policy to go. You might want to use it as a vessel to provide money to loved ones for specific purposes. As a result, you might only want your coverage to last for a certain number of years. If that is the case, then a term life insurance policy might be your best bet. The challenge, however, is how to choose the right term that works for you. Here’s how to do so. 

 

What is Term Life Insurance?  

Many people buy life insurance with a specific idea in mind. For example, parents with young children might want the plan to pay for the child’s college tuition if the parent pre-deceases the child. As a result, they might only want their policy to last for a certain number of years. Term life insurance is the way to get this coverage. 

Term policies offer full death benefits to beneficiaries. However, they include a start date and an expiration date. If the insured person dies while the policy is active, then the beneficiary can file a claim for the death benefit. But, once the expiration date passes, the policy simply goes away. 

 

The question you might ask yourself, however, is for how long you want a term policy to last. The answer usually has a lot to do with your objectives for the policy. 

 

Choosing the Correct Policy Term  

Most term life policies come with standardized term options. For example, these might be 5, 10, 20 or 25-year terms. The one you choose will determine the term length.

 

You can often change the policy term later or convert the term policy into a permanent policy. Depending on how you want to use the policy, you might need a shorter or longer term.  

 

For example, most people enroll in life insurance upon having a child. They might feel like they need this policy only for as long as the child is a minor. As a result, they might choose a 20-year term. If the policy begins while the child is still a baby, then it will remain in effect until they are at least 20 years old. As a result, if you die in this time, the child’s inheritance, lifestyle and care needs can have coverage. The policy can then terminate once the child is on their own. 

 

When buying your term life policy, tell your agent where you want the money to go. They can then help you arrange the policy’s term to make sure it goes directly to that purpose.