If you’ve decided that term life insurance is the right life insurance policy for you, you’ll have two more decisions to make: the coverage amount and how long of a term to purchase. Typically term lengths range from 1 year up to 30 years. So how do you decide how long you need the policy for? We share our thoughts below.
1 Year
One year is a very short time to have a policy, but it can be useful in some cases. A one year policy can be beneficial if you only have life insurance through your employer, but it is no longer in effect due to leaving the company or other reasons. A very short time policy like a one year term life insurance policy can help ensure you are covered in between jobs.
5 Years
A 5 year term life insurance policy can be useful to cover the cost of a short term loan or the college education of your children. The shorter the life insurance policy, the more affordable the premiums can be, so a 5 year policy can be a good option to cover any short term needs.
10 Years
While 10 years can seem like a long time, a 10 year term life insurance policy is still meant for someone with short term life insurance needs. Many of the reasons people take out a 5 year policy hold true for a 10 year policy, like loans and college education. If you have a mortgage, depending on how long it is for, you may consider a 10 year term to cover mortgage payments.
20-30 Years
One of the most common reasons for purchasing a 20 or 30 year term life insurance policy is when your family expands with children or other dependents. A long term life insurance policy can provide for children for all of their childhood as well as cover more short term costs like mortgage payments, credit card debt and college education.
Make sure you accurately determine your financial situation before you select a term length and cover amount.
Brett Royster
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