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Financial Insurance

How Long Should My Life Insurance Last?

life insurance how long should it last

When shopping for life insurance, you have to make a lot of decisions. One of those decisions is choosing a policy length. Many life insurance providers offer coverage until your death or for a set period. In order to choose the best life insurance policy length for your needs, you must consider three things:

  • The Amount of Coverage You Need
  • Your Budget
  • How Much You Qualify for Based on Age and Income

Life Insurance Lengths

Once you select the amount of coverage you need for your life insurance policy, you must start to consider all of the options you have for the length of coverage. As we mentioned earlier, different companies offer different lengths. You may find one company that offers permanent life insurance, which covers you until death. Some permanent policies max out at 100 years, however.

Other Insurance providers offer term life insurance, which provides you with coverage for a set term. Most of these term policies are good for 10, 20, or 30 years. You may see some that offer other increments of five or 10 years. In fact, some offer up to 35 or 40 years of coverage.

How to Calculate Your Life Insurance Coverage Length

With all of the different term options, it can be difficult to choose a length for your policy. Therefore, it’s important that you remember why you are getting the policy. Life insurance is designed to pay death benefits to your beneficiaries if you die during its term. These death benefits protect your family from financial burdens resulting from your death.

What kind of financial burdens are we talking about?

Mortgages, bills, and every day costs of living don’t stop just because you die. If your income contributed to your household, life insurance makes sure that surviving members of your family can continue to pay for their lifestyle. It also ensures that a roof stays over their heads by paying off a mortgage completely or contributing to monthly payments.

With that in mind, you can better calculate the length of life insurance coverage that you’ll need. New parents may want 20 to 30 years of coverage to cover the length of time that you’ll have children depending on your income. A longer term can also help pay for college!

Homeowners should plan for a policy that covers the length of their mortgage. 30-year terms are the most popular length for that reason. With this coverage, you can have peace of mind knowing that your family won’t lose their home if something happens to you.

Determining Term-Length Eligibility

Even if you decide you need and can afford a certain term length, you don’t have the final say in the matter. Your life insurance provider ultimately determines how long you can be insured. They typically base your eligibility off of your age and income. In most cases, older people have more limits, but there are some companies who are willing to offer their longest term length to older applicants. It’s important that you speak with a life insurance agent to see how many years of coverage you qualify for.

Learn More About Policy Lengths for Life Insurance

Are you interested in learning more about policy lengths and how they affect your life insurance? If so, we recommend that you get in touch with several different providers. Though this guide serves as a basic guideline, they can give you all of the information you need to make an informed decision for you and your family.  

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Financial Insurance

How Much Does Life Insurance Cost?

life insurance cost

Your life insurance cost depends on many different things, including your age, gender, and coverage amount. Many young people put off purchasing a policy because they view it as an unnecessary expense. However, you can often get a policy for very affordable rates.

What is the average cost of life insurance?

A single variable life policy can cost you as little as $40 a month. If you are more interested in a universal life policy, you could find yourself paying about $55 a month. Since those numbers are simply averages for individuals across the board, you could find yourself paying more or less.

In this article, you can learn more about all of the factors that determine your premium. We cover:

  • Age
  • Gender
  • Timing
  • Health
  • Coverage Amount

Age and Life Insurance

As with any other insurance, life insurance premiums depend on the provider’s risk. It’s important to remember that insurance companies are a business, and they make their money from premiums. If a person is more likely to cash in on their policy after only paying premiums for a year, then there is more risk to insure them. For this reason, insurance companies have to charge a higher premium.

Let’s take a look at some examples:

A 30-year-old man in perfect health takes out a 20-year life insurance policy. Since it is less likely that he will receive his death benefits, he could pay less than $25 a month.

A 50-year-old man in excellent health may only need a 10-year life insurance policy to get him to retirement, but he could still pay twice as much for the same amount of coverage as the 30-year-old man.

Impacts of Gender

Your life insurance policies are calculated similarly to your health insurance premium. A lot of research goes into determining the risk of insuring women versus men. Most companies charge men higher premiums than women. While the difference is usually insignificant for people under the age of 50, the gap in premiums starts to become more noticeable after age 55. At this point, men start paying an average of 27% more than a woman. The gap widens with age.  

Timing—Should You Wait?

Most young people never give life insurance a second thought. They put off shopping for policies until later because they don’t think they’ll need it. Some people may choose to wait until they have kids. Others might wait until they have extra room in their budget to pay the monthly premium.

However, people without kids still need life insurance, and if you don’t have the funds to pay a small monthly premium, you definitely won’t have enough money to cover end-of-life expenses or debts. For that reason, you should consider getting life insurance right now. Putting off buying life insurance could end up being a costly choice, but it’s up to you to determine the best timing for your family.

Health

A young, healthy person can usually get a life insurance policy by simply answering a few simple application questions. However, the process can get more complicated for older people and anyone with a pre-existing condition. They often have to get underwritten life insurance.

Underwriting is the process an insurance company uses to determine the risk of insuring you. They often have you undergo a medical exam and testing to see how healthy you are. Though it is inconvenient, healthy people can also get underwritten life insurance if they would like to lower their premiums.

Coverage Amount

Lastly, your insurance premium is going to depend on the amount of coverage you need. If you require a lot of coverage, you should expect to pay more money. However, you shouldn’t skimp on coverage just to lower your premium. We recommend that you assess your current financial situation and any future financial factors to find the right balance for your needs and budget.

Request a Life Insurance Quote for More Information

Though we wrote this guide to tell you the basics of life insurance costs, we can’t give you a straight answer. Premiums vary so widely from person to person and company to company. The only way you can truly find out the cost of your life insurance is by contacting an agent. We suggest that you get a life insurance quote from several companies before making a selection.  

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Financial Insurance

Life Insurance Policies You Need to Know

life insurance policies

When you start shopping for life insurance, you’ll quickly notice that policies fall under one of the two main categories: whole life insurance or term life insurance. However, there are many other subcategories that stem from those two. As a result, there are several different options from which you can choose.

In our article on the basics of life insurance, we touched on some of the different types. This guide goes deeper into explaining the different types of policies, which include:

  • Term
  • Whole
  • Universal
  • Variable
  • Variable Universal
  • Indexed Universal
  • Final Expense
  • Group

Term Life Insurance

A term policy provides you with death benefits for a set number of years. Death benefits are only payed to your beneficiaries if you die within the term. For that reason, this policy type is often the most affordable and simplest policy to get. However, you’ll have to shop for a new policy every time the term expires, so it can create more work in the long run. It can also leave you with higher premiums as you age.

Whole Life Insurance

If you want to stick with one life insurance policy, then a whole policy is the best option for you. It never expires, so you can keep it for as long as necessary. Though it can be up to 15 times more expensive than its term counterparts, whole policies build a cash value that you can withdraw, invest, or borrow against.

Universal Life Insurance

Universal policies also have a cash value. Your premiums contribute to both the cash value and death benefits, but unlike whole, you can change your policy without having to cancel and get a new one. In fact, you can change the premium and death benefit amounts as long as you maintain the minimum premium. Many policies allow you to use your cash value to pay the premium, so you could someday find yourself in a position where you won’t have to pay premiums out of pocket.

Indexed Universal

Indexed universal plans are a variant of the standard universal plan. With an indexed universal policy, your cash value interest rates are based on the performance of a specific group of investments, also known as an index. You never have to worry about losing money, though. IUL policies have a minimum guaranteed interest rate.

Variable Life Insurance

A variable life insurance policy is very similar to an IUL, but instead of having an indexed interest rate, it is variable. That means there is more risk involved, but you could also see a lot of growth. It’s easier to understand how these policies work if you view its cash value as an investment option.

Variable Universal Life Insurance

If you choose variable universal life insurance, you’ll see that it’s very similar to both a universal policy and a variable policy. Variable allows you to adjust your premium and death benefit amounts while also investing its cash value. It’s the best of both worlds, but it is one of the more complex policies to understand.

Final Expense Insurance

Older people without life insurance may find final expense insurance to be a good fit. This policy is designed to cover any end of life expenses, such as a funeral, cremation, or medical care costs. It’s very expensive compared to the coverage it provides, so it should only be considered by people who don’t have enough savings to cover these costs.

Group Life Insurance

Some employers offer group life insurance at no cost to you. In these cases, it’s a great benefit, but keep in mind that it may not provide you with enough coverage for your family.

Find Out More

Now that you know more about the different types of life insurance, you should be better prepared to make a decision about your policy. However, we still encourage you to speak with an agent to find out which policy type is the best option for you and your needs.

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Financial Insurance

Life Insurance: What You Need to Know

life insurance guide 101

In order to know which life insurance policy is best for you, you must first understand its function. What is life insurance? It is a contract between you and an insurer to provide your beneficiary with death benefits based on your payment of premiums.

Still sounds complicated?

In this guide, you’ll learn all of the basics that you need to understand—no matter your stage of life. Whether you’re shopping for the first time or switching policies, we encourage you to read on to find out more about life insurance 101.

Types of Life Insurance

The two primary types of life insurance are term and permanent. With term insurance, you are covered for a set amount of time. It typically lasts 5-30 years, whereas permanent insurance covers your entire life or up to 100 years old.

For the most part, providers sell term policies with level premiums, so you never have to worry about the rate going up as you get older. However, you may have the option to convert your policy to a permanent insurance after the life insurance term is up. With permanent policies, you can choose between whole life and universal plans. Whole life means that you pay the same premium throughout your entire life while universal life insurance gives you flexible premiums.

The biggest difference between term and permanent policies is the ability to build value. A term plan has no value at the end of the life insurance term, but permanent insurance increases cash or loan value. That means you can withdraw, invest, or even borrow against that value. If that’s a feature that is important to you, a permanent policy would be your best option.

Calculating Life Insurance Rates

Your health and age are two of the biggest factors determining your premium rate. In fact, policies are issued either simplified issue or fully underwritten. The former often comes at a higher price because it is based on simple application questions. The latter typically offers lower rates if you show good health through a thorough medical exam and lab work.

Those aren’t the only factors that insurance companies consider, however. They also base your premium on:

  • Your Gender
  • Family Medical History
  • Location
  • Lifestyle

What Does It Cover?

You might be thinking that if your young and healthy, you don’t need insurance at all, but that’s simply not true. It is especially important for young people with families to get insured. A good life insurance policy can help your loved ones with:

  • Funeral Expenses: Did you know that the average cost of a funeral is over $7,000? Add to that the cost of a cemetery plot, headstone, or vault, and it’s even higher. These high end of life expenses are the biggest life insurance selling points for a majority of people.
  • Replacement Income: If your income plays any role in your household’s finances, you need life insurance. When you leave behind a spouse and young children, it helps them maintain their standard of living.
  • Mortgage Payments: It is also crucial that you have life insurance to cover mortgage payments. Nothing could be worse than losing a loved one and your home all at once. Your insurance policy could help with monthly payments or pay off the remaining balance entirely.

How Much Coverage Do You Need?

The answer largely depends on your family and financial needs. Typically, young married couples with children and single parents need the most coverage for the items we mentioned above. We suggest that you take a look at your mortgage or other loans, the cost of your funeral, and your income to choose an amount that best fits your needs.

On the other hand, empty nesters and retirees typically need fewer death benefits. You may not need life insurance at all if you’ve paid off all of your debts and saved accordingly. A financial advisor can help you determine how much coverage you will need.

Get Your Life Insurance Quote

Every policy is different. What may be best for you could be entirely different from what is best for your neighbor. For that reason, we recommend that you do further research and shop around for the best life insurance quote for your needs. There are plenty of agents and online tools ready to help you choose a life insurance policy.