Which is Better – 20 or 30-Year Term Life Insurance?
Choosing the right term for a term insurance policy is a tough decision.
A 20-year term vs. a 30-year term...how do you know the difference and decide which one will suit you best?
Let’s examine your reasons for buying life insurance to help you select which term length is the best for your unique situation.
Quick Article Guide
Here’s what we'll cover in this post:
Choosing the Right Term Life Insurance Policy
Each person and his or her family have their own unique circumstances. Also, each of you are at various stages of your life in terms of your careers, savings/investments, and financial situation.
Let’s assume you have already decided on how much insurance you want, but simply can’t decide how long you want to have it in place.
There’s 2 ways to look at your situation - this includes where you stand right now and where you think you’re going to be down the road (which means your future needs). We know you don’t have a crystal ball and no one can foretell the future, so that means making an educated guess.Let’s look at some of the reasons why you want insurance to help you decide on how long you want the policy.
Reasons for a 20-Year Term or 30-Year Term
Choosing between a 20 or 30-year term depends largely on the reasons you want to buy life insurance in the first place. When it comes to term life insurance, most people purchase coverage to provide a source of income for their family if they no longer around.
Now, how old are you right now? If you’re in your twenties or thirties, you may have just bought a home or just started a family. At the very least, you want to ensure your kids are protected until they’re at least 18, or even more if you want add another 4 years for college.
Buying a 20 or 30-Year Term to Support Your Spouse and Children
You also have to consider your spouse. Is your spouse working right now, or staying home and looking after the kids until they’re old enough? Will your spouse be returning to work sometime later on?
What is your spouse earning now, and what will his or her future income be like? Will he/she earn enough to pay all the bills and raise the kids? And even after the children have left the nest, will your spouse be able to manage financially later on?
So, how do you decide? If you had a 20-year term policy and died 21 or 25 years from now, ask yourself how this would affect your spouse and family financially if you had no life insurance and your income was no longer available. If you answered – “Not good!” then we think you have your answer as to which term policy to buy.
What Happens When the 20 or 30-Year Term Policy Ends?
You might think, “Well, I’ll just renew my policy.” You can do that, but just remember that life insurance also gets more expensive as you age. If you’re 25-years-old, you can get a 20-year term policy for a $250,000 term life insurance policy right now for around $13.00 a month or $150.00 per year if you’re healthy and a non-smoker. A 30-year-term policy would cost you around $18.00 per month or $213.00 per year.
If you had to renew that policy today at age 45, then it would cost you a minimum of $29.00 per month or $348.00 per year. And that’s now! Twenty years down the road, it’s going to cost much more. Also, during that time it’s quite possible that your health is going to slip. You might have put on some weight, developed health problems such as diabetes or heart disease.
Now there is another option that some life insurance companies offer - conversion. With some policies, you have the option to convert some or all of it to permanent coverage, as long as the conversion is done before age 70. Not all companies offer it, so make sure to check with your agent if you can add this rider to your policy.
In addition, do keep in mind that your policy premiums will increase once you convert to permanent coverage. But it is an option that allows you to keep coverage when you're older without having to re-apply and take a medical exam.
Choosing a 20 or 30-Year Term and Your Health
As you become less healthy, you will no longer likely qualify for the best rating, which means that your premiums are going to be even more expensive.
Let us give you an example. Suppose you choose a 20-year-term policy with $250,000 of coverage right now, and it costs you $150.00 per year. At the end of that term, you realize you need insurance for another 10 years but you’ve developed heart disease and qualified for only a standard rating; now that 10-year policy would cost you $353.00 per year, which would actually be even much more expensive in the future.
You can save that money and worry by buying a longer term such as a 30-year-term because your premiums will stay fixed for the entire 30 years, regardless of how your health deteriorates. So, that’s something else to think about.
If you’re young, a 30-year-term policy might make more sense and if you’re older, then a 20-year-term might suit you best. But, make sure to think of your future needs and what might happen down the road in a worst-case scenario.
The Bottom Line
When shopping for life insurance you always want to talk to an independently-owned agency like JRC Insurance Group. We can access and research dozens of highly-rated companies to find your most affordable options.
If you have health concerns, don’t let that dissuade you. We can help you find the policy that best suits your needs by comparing rates and options from dozens of leading insurers. If you have questions or want to learn more, please give us a call at 855–247–9555.
Chris is a co-founder of JRC Insurance Group. Prior to founding JRC, he owned his own agency, and he has been a licensed life insurance agent since 2014. Chris is a die-hard San Diego Padres fan, and in his spare time he enjoys reading, ping pong, poker, and spending time with his wife and three daughters.
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Questions From Our Visitors
Some of the questions we received from our website visitors:
Can you get 30 year level term life insurance in Ny state for a 53 (will be 54 in May) male? Non smoker in excellent health? 250,000 or 300,000 coverage.
Hello, Todd, Yes, JRC works with some New York approved term life insurance carriers which can still offer 30 year term polices to men in their early 50's. Give us a call at (855) 247-9555. We'll review their application underwriting questions so we can compare rates to determine which provide the best values, and email you a complimentary cost/benefit analysis. If you with to consider carrying life insurance beyond 30 years, we can also see if there are any competitively priced age based life insurance for you. These policies function like term policies (fixed rate, cancel any time, no cash investment/accrual), and may be able to provide guaranteed rates to age 90 for a few dollars more per month than a 30 year term to age 84.
So, at my 32, Should I better get now a 20years and look for a 20 more when 52? I see difficult to renew if I go now for the 30years
Juan, Thank you for visiting JRC's life insurance website and your question. Most guys your age purchase 30 year term policies to protect their family against the financial loss caused by a premature death. These policies provide a guaranteed "conversion option", where near the end of the 30 year term, you can convert the policy to a smaller permanent policy, without reproving your health. As you're aware, it's impossible to predict what your life insurance needs will be in 30 years, so this provides a very valuable option and peace of mind that you can always be covered, if you choose. That being said, you're allowed to carry multiple term policies, so, you could add another 30 year policy (or other term length) down the road to extend your term coverage past age 62. That 2nd policy would also carry a guaranteed conversion option. Give us a call at (855) 247-9555 and a licensed agent for your state will explain further and determine what best pricing pre-qualified options are available to you.
I am 25. Should I get a 10 year, 20 year, or 30 year term policy? If I do a 10 right now, I can get a 30 at age 35 that will be good through age 65. If I get a 30 now, I will have to shop for a new one at age 55... What should I do?
Ms Aquino, Thank you for question and contacting JRC Insurance Group. You ask a great question, and we commend you for looking at life insurance in your 20's. We're guessing you're married and/or have children, which is when most people where other's are dependent upon them. Most people your age take out a 30 year term policy, which could cover all the years you'd need life insurance, and is generally very affordable...the cost of years 20-30 are much lower now than if you waited until that time. You're able to carry more than 1 policy, so many people "stagger" to or three policies, having them run concurrently and overlapping in the early years. For instance, if you just bought a home and have 2 young children, your biggest need will likely be over the next 20 years, with that need for a large amount of life insurance to replace your "financial value" diminishing as you get closer to retirement age. Many people your age take out a $500,000 30-year term policy which is likely very affordable since the statistical probability of you dying before age 55 is very low. 10 years from now, we can help you re-evaluate your situation, and perhaps a second 30-year term policy with a smaller death benefit would be appropriate, bridging you to age 65. I actually did something similar, but was in good health and just "replaced" my original policy with a new one where there was a price break at $500,000. Another thing to consider, which is a great benefit, is that you have a guaranteed option to exchange a term policy for a smaller permanent policy about the time you get closer to retirement age. This can be extremely valuable, in that your "risk class" is the same as when you first replied, regardless of if you've subsequently suffered cancer or other serious health issue. It's nothing you have a decide on now, but provides peace of mind you'll likely never need to reapply for life insurance again. We look forward to helping you and answering any questions which arise now or down the road. JRC's fully licensed agents will first gather the preliminary underwriting info needed to provide pre-qualified quotes for up to 40 highly rated insurance companies to ensure you have your most affordable policy. You'll have many other expense cropping up soon, so you won't want to overpay for life insurance! Call JRC at (855) 247-9555. We look forward to helping you and your family.