You might have already heard of term life insurance policies with a 20 or 30-year term, but have you heard of a 25-year term life insurance package?
Most insurance providers offer life insurance plans with terms of 10, 20, or 30 years. However, some companies offer even more flexibility with coverage length. While many companies do not offer a 25-year term life insurance product, some companies do. When 25-year term life insurance is offered it’s a good thing for consumers.
There are several reasons why a 25-year term life insurance policy might make more sense to you than something else. For example, you can’t afford a 30-year term package, but you think that a 20-year term wouldn’t be sufficient for your family. You also might consider a 25-year package if you’re about 50 and want to be covered until you’re in your mid-70s. Coverage that ends before age 80 will usually cost significantly less than coverage that ends after age 80. Some people who are 40 might want to be covered until they reach the retirement age of 65.
The real benefit of the 25-year term policy is that it provides another option for people to obtain coverage, and only pay for exactly what they need. Remember that a life insurance policy can be canceled or surrendered anytime, and it does not affect your credit, so if you need to purchase a longer-term policy but decide to cancel it earlier there are no consequences to your credit and it does not affect your future insurability.
Every individual and his or her family have their own special circumstances. Furthermore, each of you is at different stages of your life in your jobs, careers, investments, and financial situation.
Mistakes To Avoid When Buying Term Life Insurance
Mistake #1: You Buy Too Little Coverage To Replace Your Income
You should buy at least 10 times your income in life insurance coverage. That tiny policy you’re getting through your employer, which might be one year’s worth of college tuition, just isn’t enough.
If you’re the main source of income in your family, then your family won’t have enough money to get by and go to college if you just have a measly term life insurance policy through your employer. Ensuring you have enough coverage will allow them to live comfortably while they figure out how to move forward in their lives.
It’s important to get coverage for both parents. Just because one is working, and one isn’t, it is no reason not to get life insurance coverage for both of you. A parent that was taking care of the household is almost just as important as one that is bringing in money. A loss of either one can be devastating. For example, you might need to hire a nanny to replace your stay-at-home wife, a tutor, or cook, even.
For a more accurate assessment of your life insurance needs, please see our life insurance calculator.
Mistake #2: Taking Too Much Time To Get Coverage
If you take too long to get life insurance, you leave your family very vulnerable if something unfortunate happens to you. A lot of people die unexpectedly – maybe they have a heart attack, get into a car accident, or get a diagnosis of terminal cancer – and you don’t want to take the chance the grim reaper catches you off guard. Term life insurance premiums tend to go up as you get older, so purchasing sooner rather than later can save you cash.
The more we age, the more at risk we are for health issues. That will cause the cost of your life insurance to go up, or even make you completely ineligible to buy it. A lot of people think they should wait until they’re debt-free to get set up with life insurance, but that is when you need it most. Your family is most vulnerable when you’re in debt and have no savings. As you reduce debt and increase your savings, you slowly start to reduce your need for term life insurance.
Mistake #3: Buying Life Insurance For Too Short Of A Term (Period of Time)
You might be trying to save a little dough by buying for a short term, but that’s not a smart idea. That’s why we suggest a minimum 25-year term in this article. That’s a good bet right in the middle of too short and too long. Some people opt for a ten-year plan, but what if you have surprise medical issues that crop up a year from now that make it impossible to get new coverage? That will cost you even more money in the long run. That’s not a smart move when you think about it.
So, how long should you get coverage for? We suggest a 25-year term policy. It will really be dependent on you and your situation, though. A good idea is to purchase based on when your children will be going off to college and living out on their own. If you plan on having kids in the future, then a 30-year plan might be a little better for you. If your kids are five years old, then a 25-year plan is ideal for you.
Mistake #4: Purchasing Too Many Riders
A lot of people go in for policy riders that raise their premium and pay extra commissions to their life insurance agents but offer very little in return.
Some of the more common riders include income replacement, premium waiver, and accidental death. You might purchase them because they have an emotional value, but they have very little practical benefit.
Mistake #5: Not Occasionally Reviewing Your Term Life Insurance Policy
It’s always a good idea to read through your term life insurance policy to make sure it has exactly what you need for your particular situation. Your coverage might have been all right a decade ago, but it might not work for you now.
You need to make sure you’ve got plenty of coverage for your changing needs. A lot of could have happened in the time since you bought your first life insurance package. You might have bought a home, had a kid or two, or gotten married. Maybe you quit smoking, stopped drinking, got a promotion, and moved out of state. Any life-changing event can help you save money or require you to modify your coverage.
Life insurance is a major part of financial planning. If you put off purchasing life insurance, you could end up in a serious financial hole someday.
Final Word on 25-Year Term Life Insurance
Hopefully, this article helped you navigate the sometimes confusing world of term life insurance. A 25-year plan is a smart investment if you have little ones. If you have a family and don’t have term life insurance right now, stop whatever you’re doing and get on the phone with your life insurance agent.