20-Year vs. 10-Year Term Life Insurance

Term life insurance pays a significant death benefit if you die during the policy term. Beneficiaries can use this death benefit to replace your income and cover end-of-life costs, such as funeral expenses. These policies come with various term lengths, including 10-year and 20-year. Although both policy types are similar, there are several important differences to consider when comparing the two.

Wondering which term is right for you? We’ll dive into the differences between 10-year and 20-year term life insurance policies so you can choose the best policy for you and your loved ones.

Term length

10-year term life insurance policies last for 10 years. Once that period expires, you’ll have to take out a new policy to continue your life insurance coverage, and in many cases, you’ll have to retake your medical exam.

A 20-year term life insurance policy lasts twice as long before expiring, which can provide you with peace of mind for much longer. Keep in mind that you’ll be older at the end of a 20-year term life insurance policy than at the end of a 10-year policy. This could make it harder to pass the medical exam, and your premiums may be higher for the new policy.

Monthly premiums

Both 10-year and 20-year term life insurance come with level premium rates, so your monthly payments will remain the same throughout the duration of the policy. Because 10-year term life policies are shorter in length than 20-year policies, you may have to purchase a new policy once the term expires to continue coverage. And since you’ll be older, you’ll likely have to pay higher premiums.

With a 20-year term life policy, on the other hand, you can lock in premiums for twice as long. And the younger you are, the cheaper your premiums may be. If you purchase a policy at 25, for instance, you’ll pay the same affordable premiums until you’re 45.

Keep in mind that many Americans overestimate the cost of term life insurance at more than three times its actual cost. Both 10-year and 20-year term life insurance may be less expensive than you think.

How to choose between 20-year and 10-year term life insurance

Picking between 10-year and 20-year term life insurance comes down to your beneficiaries and needs. For instance, if you and your spouse are new parents, you may consider a 20-year term life insurance policy. This provides coverage long enough to ensure your child is financially protected until they reach adulthood. You may also consider a 20-year term life policy if you have long-term debt that loved ones may have to pay off if you passed away, like a mortgage or student loans. 20-year term life insurance could give them the funds they need to settle these debts.

On the other hand, there are many instances where a 10-year term life policy may make sense. If your child or children are in their teens, for example, a 10-year policy can cover them into adulthood and save money on premiums. This option may also be ideal if you’re a senior who wants to provide a financial cushion for your children or other loved ones.      They can use the payout to cover essential expenses or end-of-life costs in the event of your passing.

It’s also important to consider both your budget and coverage preferences when picking a policy. The best way to find the right term life insurance option is to shop around for multiple life insurance quotes, regardless of term length. This will provide several options, helping you pick the best policy without breaking the bank.

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