You started looking for life insurance and everyone is quoting you a 20-year term and you’re wondering if this is the right plan for you. Well, it can be if it aligns with your current situation. So let’s look at all the different things you should consider before jumping into this plan. For a quick highlights here is a summary:
- Term life is a type of short time frame life insurance that provides coverage for a short and specified period of time. Since you have to pick a specified period of time you will have to know how long you want to receive coverage for. The time that you want to receive coverage for is called “term”.
- A 20-year term policy is also the most realistic and practical because if you think about your life 20 years from now you probably see your children being adults working. Twenty years also provides enough time for a person to work their way up the corporate ladder and a 20-year term will insure you for the time that you are working the hardest.
- Another pro is that it’s inexpensive. Term life insurance is the cheapest insurance on the market but just speaking for a 20-year term policy, it is more affordable than a permanent life or 30-year term.
- Annually renewing your policy can be a downfall because even though your policy’s premiums were level, once your policy expires your rate will increase every year.
- If you are not in the best of health conditions than a 20-year term policy may not be the best choice for you. This is because insurance companies use your overall health as one of the most important factors.
Term life insurance: Explained
Term life is a type of temporary life insurance that focuses on pure protection and affordable premiums. Since you have to pick a specified period of time you will have to know how long you want to receive coverage for. The time that you want to receive coverage for is called “term”. Depending on which life insurance company you choose to purchase a term policy from will determine the different lengths of term life that you can choose from but many carriers offer 5, 10, 15, 20, 25, and 30-years. This type of insurance is also the most affordable and is perfect for those who are trying to fill those short-term needs.
20-year term life policy
Like we touched base on before, term life is a temporary form of life insurance that provides coverage for a short and specified period of time. In this case, 20-years would be the specified period of time. Now that you have picked how long you want to receive coverage from you now need to determine the amount of coverage you want. The most popular amounts of coverage people choose are $250,000, $500,000, $750,000, and $1,000,000 just keep in mind that your coverage amount should cover your burial costs, replacement income (if spouse relies on your income) and any debts you may have, even your mortgage. If you’re securing a 20-year term policy your monthly premium is determined by your age, gender, and health rating. Again, depending on the company you choose to work with, your policy may offer the opportunity to convert into a permanent life insurance policy.
Pros of a 20-year term policy
There are many pros of purchasing a 20-year term policy such as the fact that for 20 years you won’t have to worry about not providing a death benefit if anything were to happen to you. If you don’t pass away you could still convert the policy into a Universal or Whole life policy without having to prove your good health and this is an important benefit.
A 20-year term policy is also solid options if your children are age 5 and up since it will provide coverage until they become adults. For individuals age 40 and up it will get you closer to retirement as well.
Another pro is that it’s inexpensive. Term life insurance is the cheapest insurance on the market but just speaking for a 20-year term policy, it is more affordable than a permanent life or 30 year term.
Cons of a 20-year term policy
The biggest downfall with a term life policy is that once your policy expires you are automatically going to be annually renewing your policy. Annually renewing your policy can be a downfall because even though your policy’s premiums were level, once your policy expires your rate will increase every year thereafter.
If you are not in the best of health conditions than a 20-year term policy may not be the best choice for you. This is because insurance companies determine your rate by your overall health risk. This is a good reason to why you shouldn’t get term life if you have a pre-existing condition or not in good health, and that is because you will get rated up the roof due to your poor health rating.
The last con about a 20-year term policy is that when it expires you’ll be older and if you need life insurance still it can get costly. Let’s say you have a 20-year policy and realize 10 years into the policy that you no longer need the policy and cancel it. Years later you want to purchase a policy, you will have to go through the whole process again plus companies will provide you with expensive quotes. That is because when you age your health deteriorates and if you were 25 when you got your term policy, you cannot expect to have the same rate or health class as you did 15-20 years ago. top 5 best term life insurance companies
The top 5 best term life insurance companies
It is very important to make sure you are purchasing a product from a reputable life insurance company. They should be around for some time and have a good rating with A.M Best Rating Services to ensure that they’re financially stable. Being financially stable is important because you want to make sure that the company will pay out your policy when your family needs it. Feel free to read our article of the top 10 best term life insurance companies to see the other 5 companies we talk about.
- Principal- Principal Life Insurance Company was founded in 1879 and according to A.M Best, Principal has a rating of “A+”. Their offer a popular traditional term life insurance plan that is a level term policy which means that your premiums are guaranteed to stay locked in during the entire length of the term. This policy also offers the option of converting from term to a permanent life insurance policy and they also offer accelerated underwriting which doesn’t require a medical exam.
- Voya– Voya Financial Life Insurance Company has been around since 1977 but didn’t turn into Voya until 2014 when they rebranded and was ING Group before 2014. According to A.M Best, Voya has a rating of “A”. Their popular term life policy is called Voya TermSmart which is a level term product which again, means that your premiums won’t change. This product also allows you to convert from a term policy into a permanent policy without having to take a health exam or prove good health.
- Nationwide– Nationwide Life Insurance Company has been around for over 85 years and according to A.M Best, Nationwide has a rating of “A+”. Their popular term life product is called YourLife Guaranteed Level Term which as you read is a level term policy. This product also allows you to convert from a term policy into a permanent policy. They also provide wellness credits which basically gives you points as long as you live a healthy lifestyle and can sway your health rating in the better direction.
- Banner Life– Banner Life Insurance Company has been around for over 180 years and are also known as Legal & General Group. According to A.M Best, Banner Life has a rating of “A+”. Their popular term life product is known as OpTerm which offers a fixed level coverage with premiums locked in for 20 years. This product also allows you to convert from a term policy into a permanent life insurance policy without having to prove good health.
- Protective– Protective Life Insurance Company was founded in 1907 and according to A.M Best, Protective Life has a rating of “A+”. Their popular term life policy is their traditional term life product that provides protection for 15-years. This product also offers level premiums which again means that your premiums won’t change.
Term life vs. Permanent life
Everyone always asks us which is better, a term policy or a permanent policy? To be completely honest, there is no real way of us answering this question without knowing everything about your life. It really depends on your specific situation. If you want a lower premium and a shorter commitment or have needs that can be met in a 20-year time span then term life is the way to go. If you can afford a higher premium and don’t want to worry about when your policy expires and care about cash value than a permanent life policy may be best for you. Permanent life insurance leaves money to your beneficiaries, builds cash value and gives you an opportunity to conserve an investment account. If you have heard of any of these plans then you are familiar with permanent life insurance: Universal Life, Index Universal Life, Variable Universal life, and Whole life.
Work With Us!
Whether you decide to purchase a 20-year term policy or a permanent policy you should still consider working with us! Either way, you decide to go you need to keep in mind that the best way to assure that you are getting the best rate possible is by shopping around for quotes and comparing companies. We are an independent life insurance agents who work with 60 top rated companies and have a mission in mind of making life insurance simple. Did we forget to mention that our services are 100% FREE and FREE of obligations? Did we say FREE enough times? Instead of DIY, doing it yourself, you should give us a call and let us do all the hard work for you!
Not only will we shop around for quotes and compare companies for you until we find the best company that reflects your specific needs, health, and lifestyle but we will also fill out the necessary applications for you! If you have 30 seconds go below this article or click here, and fill out our super quick quote engine so you can see yourself what different “A” rated companies have to offer. It’s like that saying “killing two birds with one stone” you get to check out quotes and compare companies all in one with our quote engine. However, here at InsureChance, we understand the value of time, there is not enough time in the world to enjoy with the ones who matter and that is why we offer these services, we want to give you back the time you deserve so that you can spend time with those who matter the most, your family.
