A Simple Guide to 30-Year Term Insurance
A Simple Guide to 30-Year Term Insurance
First things first: what is term life insurance?
Unlike permanent life insurance that covers you for life, term life insurance charges a fixed premium for a fixed amount of time. You buy a policy for 10, 15, 25, or 30 years and pay a locked-in premium for the length of the term. If you die before the policy term expires, your family receives the exact benefit amount stated in the policy.
Think of it this way: Term life insurance is more “if you die,” whereas other types of life insurance come with a “when you die” mindset.
Why should I choose a 30-year term life insurance policy as opposed to say, a 20-year term?
Value. A 30-year term policy provides the fullest amount of coverage at an optimal amount of savings.
Let’s say a 30-year-old husband and father of two purchases a 30-year term life insurance policy while his children are in elementary school. That policy will cover his children until they are in their early 30s and shield his spouse from assuming the burden of his lost income, their mortgage, and other debts.
By the time the policy expires, he will most likely have accrued enough assets to protect his family’s financial future without life insurance. Or, he can purchase or convert to another policy.
Also, a level-term life policy is a sturdy anchor to build around. You can add riders to protect your family should you suffer a terminal or chronic illness or cover any other unfortunate events.
Let’s take a look at a 30-year term life’s pros and cons.
|30-YEAR TERM POLICY PROS||30-YEAR TERM POLICY CONS|
|Locked-in rate – even if you get sick while your policy is active.|
Not so with shorter terms.
|It’s the most expensive level term insurance available. Shorter term policies are less expensive.|
|Provides financial protection for your children when they’re most vulnerable—from childhood to early adulthood.||It’s not an affordable option for people over 45.|
|Covers your salary, your mortgage, and outstanding debt.||It may not make sense for a childless couple or family of three with a shorter-term mortgage and less debt.|
|Provides only what you need if you need it; frees you to invest in wealth-building vehicles like college funds, IRAs, stocks, and the like.|
|Many term policies do not require a medical exam; all term policies shield you from the mandatory medical exam inherent in a permanent policy should you decide to convert to one later.|
|Benefits are 100% tax-free.|
30-YEAR TERM POLICY PROS
- Locked-in rate – even if you get sick while your policy is active. Not so with shorter terms.
- Provides financial protection for your children when they’re most vulnerable—from childhood to early adulthood.
- Provides only what you need if you need it; frees you to invest in wealth-building vehicles like college funds, IRAs, stocks, and the like.
- Many term policies do not require a medical exam; all term policies shield you from the mandatory medical exam inherent in a permanent policy should you decide to convert to one later.
- Benefits are 100% tax-free.
30-YEAR TERM POLICY CONS
- Is the most expensive level term insurance available. Shorter terms are less expensive.
- It’s not an affordable option for people over 45.
- It may not make sense for a childless couple or family of three with a shorter-term mortgage and less debt.
Is a 30-year term policy the best life insurance for You?
That’s a decision only you can make. But some factors for you to consider include:
- The policy’s cost
- Your age and the age of your dependents
- How many dependents you have
- Your current and expected financial obligations
Here are the factors life insurance companies consider:
- Your gender – men pay higher premiums
- Your age – their risk of payout grows with each year your policy is active
- Your general health – the healthier you are, the less likely they’ll have to pay a benefit
- Your lifestyle (habits and hobbies) – the more you smoke and drink, the more likely they’ll have to pay your benefit
The main takeaway is this: A 30-year policy is the best term life insurance plan for young professionals buying their first home and starting a family. It will provide for their children when they’re financially vulnerable and shield any other dependents from assuming large debts with less income.
If that sounds like you, keep this in mind: Even if 30-year term life insurance rates are higher than other level term plans, the value it provides makes your premium worth every penny. You pay a fixed rate that covers only what you need during a period when your family may need it most.
Find the best life insurance for you. Get a life insurance quote today.