How Long Should Your Term Life Insurance Last?

You'll want a term life policy as long as you have others depending on your income to meet financial obligations.

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When you’re buying term life insurance, you have two main decisions to make: how much life insurance to buy and how long the coverage should last. You want the policy to continue until your last major obligation is taken care of. So, the duration of your financial commitments will generally determine how long your term life insurance policy should last.

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Your family is unique — your life insurance should be, too.

How long is term life insurance?

Term life policies are generally sold in lengths of five, 10, 15, 20, 25 or 30 years. In some cases, you can find 40-year term life insurance. The longer the policy, the higher your life insurance quotes are likely to be. That’s because you’re locking in your rate for a longer time, and as you age, health problems tend to crop up and your likelihood of dying increases.

Another option is annual renewable term life insurance, which guarantees your ability to renew coverage annually for a set period of time without reapplying. But when you renew coverage, the premiums typically increase. As such, you’ll generally pay less over time for a standard level term life insurance policy.

Which term length is right for you?

Here are the most common term lengths and who they might be a good fit for.

Annual renewable term life is a good choice for people who have short-term financial obligations, or who want to cover a gap in employment until they get a new group life insurance policy through their next job.

5-year term life insurance may also be a good fit for someone with short-term financial obligations, such as a small loan or college fees.

10-year term life insurance may benefit parents or guardians with older children who still rely on their income, or someone approaching retirement who needs to cover the last leg of their employment.

20-year term life insurance is the most popular term length and can help cover the income of new parents or newlyweds as their family grows.

30-year term life insurance can help cover large, long-term financial obligations, such as a mortgage or college debt. This term length may also be a good fit for young applicants who want to cover the majority of their earning years.

If your longest-lasting financial obligation falls in between available term periods, round up. For example, if your mortgage will be paid off in 17 years, round up your term choice to 20 years.

How to choose the right term length

If you're wondering how long your term length should be, think about the following three factors.

  1. The length of your mortgage: Your mortgage is a big part of your monthly expenses and often the main reason people buy life insurance. If you want your life insurance to cover your mortgage, consider how many years you have left until you pay off your house. You don’t want your policy to expire after 20 years if your mortgage payments will last another decade after that.

  2. How long until children are on their own: Children can be expensive, requiring food, clothing and education, not to mention summer camps, music lessons, various electronic devices and so much more. How long until you can expect your kids to support themselves? That may be at least a few years beyond age 18, particularly if you’re planning to pay for college.

  3. The number of years until you retire: Ideally you’ll have savings for when you stop working. Therefore, if you’re buying term life insurance primarily to replace your income, you may not need it after retirement. Once your kids are grown up, the house is paid off and you’re living off your retirement savings, life insurance is one more thing you no longer need to worry about.

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