Term life insurance is one of the most popular types of life insurance on the market. Unlike whole life insurance, it only covers you for a specific period of time, after which it expires and you would need to buy a new policy. It’s much more affordable than permanent life insurance plans, like universal or whole life insurance, which is part of the reason why it’s so popular. Many companies offer short 10-year term life policies. In this article, we’ll talk about why you might want this type of policy, as well as how to shop for and apply for one.
Why You Need Life Insurance
Many people don’t realize they need life insurance until it’s too late to get an affordable policy. Life insurance protects your family in the unlikely event of your death. It is intended to cover your funeral expenses, as well as to pay off any remaining debts and support any children or other family members that currently rely on you. If you don’t have life insurance, your family could end up stuck with financial responsibilities they aren’t prepared for. The earlier you buy life insurance, the more affordable it is, so it’s something to start looking at when you’re relatively young.
How Does a 10-Year Term Life Plan Work?
When you open a term life insurance policy, you’ll be asked to choose a length for your policy, usually 10, 20, or 30 years. 10-year policies are usually the most affordable, and your premiums will stay the same for the entire length of the policy. You will likely need to answer some questions about your health and lifestyle to qualify, and in many cases, you will need to get a medical exam as well. After the 10 years ends, you will need to completely reapply for a new one – you usually don’t have the option to extend it.
Why Should I Take out a 10-Year Term Life Policy?
At first, the idea of taking out a 10-year policy might feel counterintuitive, as it covers you for a relatively short period of time. However, there are actually many reasons why you might take out a 10-year life insurance plan. Here are some instances where you may want to consider taking out a 10-year term life plan.
- You are on a strict budget and can’t afford a more expensive life insurance policy. 10-year term life policies are typically some of the most affordable, so they’re a good option for people who are on a tight budget. You can get the coverage you need without paying an unaffordable premium. Once the 10-year term life policy ends, you can upgrade to a policy with better coverage should you need it.
- You are less than 10 years from paying down your mortgage, student loans, or other debt. One of the biggest reasons people take out life insurance is because they don’t want their family to be stuck with their debt payments if they die. If you already have savings to cover funeral expenses, you likely won’t need life insurance once your debts are paid down.
- Your kids are less than 10 years from being self-sufficient. Another big reason why people take out life insurance policies is to make sure their children will be protected in the event that they pass away. However, once your children have moved out of the house and have their own incomes, this becomes less important. If your children are already in middle or high school, chances are you won’t be supporting them in 10 years.
- You’re already setting up a financial safety net. If you’re close to retirement and have already been saving money for a while, you may be at a place where you won’t need insurance in a few years. Once you have enough money in savings to cover the end of life expenses, there’s no need to keep paying premiums every month.
How Can I Apply for Insurance, and How Are My Premiums Determined?
Applying for insurance is relatively easy – you can usually go online and answer a few questions to get a quote, or contact the insurance company over the phone. Once you’ve got your quote, you can decide whether or not you want to apply. You will need to fill out a form and provide your basic contact information, information about your job and lifestyle, and questions about your health. Then, the insurance company will usually have you schedule a medical exam. This exam can happen at your home or work, or you can go into a clinic. It typically takes less than 30 minutes and is relatively stress-free. You’ll usually need to give a blood and urine sample, and you’ll have your blood pressure and heart rate checked. You will also need to have a conversation with your examiner about your health history. Afterward, the insurance company will assess the results and give you a final offer on pricing, which you can choose to accept or decline.
When determining your premiums, the company will assess you to see how much of a financial risk you are. The more likely you are to die, the more they will charge you. This essentially ensures that they will have the money to pay your beneficiaries when they file a claim. If you have health conditions that are likely to result in death, they will charge you more to compensate for the extra risk. This is why it’s best to purchase life insurance relatively early when you’re at your healthiest and the premiums are low. If you have a risky lifestyle, insurance companies may charge you more for that as well. For example, people who go skydiving frequently or drive racecars are usually subject to much higher premiums.
How Can I Choose the Best 10-Year Term Life Insurance Policy?
There are so many different companies that offer 10-year term life policies, so it can be difficult to determine which one is going to be best for your needs. Premiums for the same person can vary wildly from company to company, so it’s always prudent to get quotes from several different places before you make a final commitment. If you are struggling to find an insurance policy that makes sense for your needs, you may also want to consider working with an independent insurance agent. They can help you narrow down your options and navigate the often-confusing jargon that comes along with life insurance. Don’t rule out local or regional agencies either. While national insurance agencies may be the ones that come to mind at first, sometimes local agencies can actually offer better pricing.
What Should I Do If the Term Expires?
Once your term expires, you’ll have to make some decisions regarding your coverage. If your financial responsibilities have lessened since you took out the policy, you may decide that you no longer need the insurance. Otherwise, you can purchase another policy at market rates. Be prepared that this policy will likely be more expensive than your own policy. Consider how much coverage you really need – you may be fine with taking out another 10-year policy after it expires.