Should I Choose a 10, 20, or 30-Year Term Life Policy?

Death is a fact of life, and it’s important to be prepared, even if it’s a topic that most people would prefer not to confront on a daily basis.

Even if you don’t currently have dependents like a spouse or children, or major debts that would carry on after you’re gone, it’s not too early to consider a term life insurance policy. Plus, the older you get, the more expensive this life insurance becomes—so you might as well lock in a great rate while you’re young and healthy.

Why choose a 30 year term life insurance policy?

The death benefit on a 30-year term life insurance policy can range from a few hundred thousand dollars to a million dollars or even up to an unlimited amount, depending on the coverage you’ve chosen. 

Locking in this longer-term policy also means that you won’t have to shop around for life insurance for the next three decades, and nor will you have to worry about your premiums fluctuating. You can basically “set it and forget it” (as long as you continue paying those premiums, of course).

A 30-year term life insurance policy is a smart option for young people in a variety of life situations, including:

• If you are newlyweds
• If you have long-term debt or a mortgage
• If you are parents of young or special-needs dependents
• If you need a long-lasting and affordable coverage solution

Why choose a 20 year term life insurance policy?

Perhaps you decide to split the difference between available options, and opt for a term life insurance policy that will remain active for 20 years.

Who might this option be a good fit for?

• Parents of young children who’d benefit from financial protection until they graduate high school or college
• Cost-conscious insurance buyers who want a longer-term policy and don’t want to spend the money on a whole life policy
• People with co-signed debts (meaning one or more of your family members has taken out a loan with someone else as a co-signer)

Why choose a 10 year term life insurance policy?

A 10-year term life insurance policy has a level (unchanging) premium and a specific death benefit. Your coverage will remain intact as long as premiums are paid. But that’s the case for any length of term you choose, so why would you go with a 10-year policy?

There are several reasons to choose a shorter term policy, such as:

• You’re an older adult with financial responsibilities
• You want protection while your children are young and at home with you
• You may also want to supplement coverage available through Social Security or other sources of income that could be lost if you die unexpectedly.
• You have shorter-term life insurance needs
• Your mortgage has been paid off, so there is no need for coverage against loss of income due to death if something were to happen to you (and no need for coverage against loss of home equity)

Which length should I choose for my term life policy?

The term life insurance policies that Lemonade offers are available for terms ranging from 10 to 40 years. This policy can help ensure your beneficiaries are protected if you pass away.

Since term life insurance premiums tend to rise as you age, many people opt for a longer term as a way to secure a favorable rate. Your premiums during this entire period will be locked in, and they won’t change.

What happens if you outlive a term policy?

Outliving the term of your life insurance policy is always cause for celebration, so take a second to be grateful. After that, know that your term life policy essentially expires, without any payout.

There are occasional exceptions, such as return of premium (ROP) policies, which Lemonade does not offer. As you might expect, the premiums for ROP policies would generally be higher than they would for a standard term life policy.

What does term life insurance cost?

Since so many factors go into a term life insurance quote, your best bet here is simply to get your life insurance quote.

As we mentioned, Lemonade’s term life offering is quite competitive with prices startings as low as $8/month. . 

What is term life insurance?

Term life insurance is one of the more popular types of life insurance out there. It’s relatively simple to set up and affordable to maintain. 

Also referred to as pure life insurance, term life insurance provides coverage to the policyholder’s loved ones (or any beneficiary) for a certain amount of time (generally between 10 to 30 years). When the term expires, the policyholder can renew it for the same or longer term, or let their policy lapse.

Note that term life insurance differs from a whole life insurance policy (also known as a permanent life insurance policy). Permanent life insurance offers cash value and provides permanent coverage until your death.

If you’d like more info on those distinctions, we put together a guide to the main differences between these policies.

How does a term life insurance policy work?

In general, the insurer will determine a premium—the amount you’ll pay every month—based on factors like your age, sex, and current health. You may be required to take a medical exam.

Some insurance companies may ask about your driving record, present medications you’re taking, smoking status, occupation, and hobbies.

If the policyholder passes away during the policy term, then the insurer would likely owe the “death benefit” to the policy’s beneficiaries. Beneficiaries can use this money, usually not taxable in most cases, to pay for healthcare and funeral costs, consumer debts, mortgages, or anything else.

Should the policy expire before the policyholder’s death, the beneficiaries won’t receive a payout. At this point, since you’re still alive—hooray!—you’d have the option to purchase a fresh term life insurance policy, though your new monthly premiums would be recalculated based on your age at the time.

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A few quick words, because we <3 our lawyers: This post is general in nature, and any statement in it doesn’t alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. You’re encouraged to discuss your specific circumstances with your own professional advisors. The purpose of this post is merely to provide you with info and insights you can use to make such discussions more productive! Naturally, all comments by, or references to, third parties represent their own views, and Lemonade assumes no responsibility for them. Coverage may not be available in all states.