You have a lot of important things to worry about in life. Family, work, or business is at the top of the list. You shouldn’t worry about whether you have the life insurance coverage you need if something happens so everyone is taken care of.
Having placed over $600 Million in life insurance coverage in my career and having delivered death benefit checks to grieving families, I understand you may be confused by your choices when it comes to figuring out what type of policy to buy, so I want to help you so you can make a decision on this important coverage and feel peace of mind everything is in place IF the unimaginable does happen.
That’s where 10-year term life insurance can come in. This policy provides the maximum death benefit protection for the least amount of premium compared to other types of term life and permanent coverage policies. Buying a ten-year term policy can put the life insurance buying decision behind you and give you peace of mind knowing that you, your loved ones, and your business are taken care of financially if something happens to you or someone you depend on financially.
In this post, I am going to discuss why I believe 10-year term life insurance, which is often the simplest and least expensive choice for getting the coverage you want and need so you don’t have the life insurance buying decision hanging over your head causing you stress. Nobody wants more stress, but anybody who depends on someone else needs the peace of mind knowing an issuing insurance company has their back to help them meet their financial obligations if something happens to a breadwinner.
What is a term life insurance compared to cash value permanent life insurance?
When you buy a life insurance policy, you are essentially buying a contract from a life insurance company in which the company agrees to pay a death benefit to the beneficiaries named in the contract if the insured person dies while the policy is in force. The insured person could be you or anybody you have a financial interest in, such as your spouse, a business partner, or even a key employee.
The premium an owner pays for any type of life insurance policy is based on several factors, such as the insured’s age, health, and the death benefit (“face amount”) of the policy. The younger an insured person is and/or the better their health status, and if they are non-smokers, then the lower the premiums for a new policy insurance is priced “per thousand dollars of coverage,” so the higher the face amount, the higher the premium all other things being equal.
Permanent and other cash-value life insurance policies (such as whole life insurance and universal life insurance) require premiums much higher than those for term insurance because a portion of the premium in a permanent policy goes towards building owners equity in the form of a cash value inside the policy. Life insurance is the only insurance product on the market that is guaranteed to have a claim filed against it if it is owned long enough. You can own car insurance or health insurance but may never have a car accident, or you may never get sick, but because everyone will inevitably die one day, life insurance will have a claim. The role life insurance coverage plays for a family or business is the policy’s death benefit can help survivors with their financial responsibilities, outstanding debts, and final expenses.
While the insured is alive and premiums are paid, the policies build cash, and these cash values represent the policy owner’s equity. This equity they can tap into anytime by either surrendering the policy (fully or partially) or by taking a loan against its value. However, if they keep this additional money in the policy or don’t use them as collateral for any policy loans, that equity reduces the risk to the insurance company in later years, allowing the policy to stay active and ultimately provide a death benefit regardless of when the insured passes away.
While cash-value life insurance policies have their place, a lot of people just want the comfort of knowing that they have the coverage amount needed today without the burden of higher monthly premiums. Let’s face it; there is an opportunity cost when buying insurance. For these people, term life insurance is likely the best choice because it provides the maximum death benefit protection for the least amount of premium.
The way term life policies are priced, the longer the guaranteed term length, the higher the premium. This makes a 10-year term the most affordable term length option on the market. You can compare various term life insurance quotes on our free life insurance quote tool, which you can find by clicking here.
How Much Does a 10-Year Term Life Insurance Policy Cost?
Ok, you are still here and haven’t headed over to our free life insurance quote tool to get real time quotes; quotes based on the actual prices the life insurance companies have filed with the state insurance. No problem. I will share with you how much a $1,000,000 10-year term life insurance policy costs compared to a 15-year term, 20-year term, and 30-year term policy for the same amount. I will even show you how much a universal life insurance policy guaranteed to last until age 120 costs. The comparison chart below are the premiums based on a 35-year-old non-smoking male in perfect health living in Tennessee.
Term Comparison
You can see in the above chare, a 10-years insurance plan is the lowest cost today. This will hold true for anybody at any age but 10-year level term life insurance rates do increase as someone ages.
That being said, let’s look at a 10-year term life insurance rates by age chart to see how the average cost for 10-year term life insurance increases as a person ages.
You can easily see that the premium for the same 10 years insurance plan increases as a person gets older. This of course assumes the individual stays in perfect health. This doesn’t always happen. As a matter of fact, some people develop health issues that make them uninsurable so the only policy they will get is what they have BEFORE they develop the health condition. This is what happened to me personally. There isn’t an insurance company that will underwrite me. The best life insurance for a 55 year old male with a pre-existing health condition is the plan they already own.
Still, I want to show you now how much the average life insurance cost changes for someone who is in just “average health” in the next chart.
If you compare these premiums to the ones for the individual in perfect health, you will see the premiums increase by more that two times for the same 10 years insurance plan.
The big thing to realize is when someone who provides financial support to others has NO COVERAGE TODAY, the risk to the people they could leave behind if they pass away is present. Taking action and at least buying a 10-year life insurance policy covers that risk today and at least for the next 10-years for a lower cost of life insurance by age.
As a “back up plan”, some 10 year term plans will continue when the term is over as “one year annual renewable term insurance.” Talk to one of our agents if you would like to understand how annual renewable term insurance works.
The bottom line – GET COVERAGE NOW! However, buy what makes you the most comfortable. If you are stuck and don’t know, buy a 10-year term life insurance plan now and you can always upgrade later just as easily as you could if you wait to buy a policy. The big difference is having the 10-year plan insures you NOW!
How much coverage should you have with a term life insurance policy?
To have peace of mind owning life insurance means you will want the policy to have enough coverage to help survivors meet their financial obligations.
While the answer to knowing how much term life coverage you should have to provide the ideal amount of financial protection will vary depending on each person’s circumstances, a general rule of thumb is that you should have coverage that is equal to at least 20 times your annual income. This amount decreases as an insured gets older, but for those with young families, 20 times earning is a general rule of thumb. To get a more accurate number, you can use our free life insurance needs calculator found below our quote tool you can jump to by clicking here.
For example, if you earn $50,000 per year, you would want a term life insurance policy with a death benefit of at least $1,000,000. This would give your loved ones enough financial breathing room to cover outstanding debts, final expenses, and living expenses for an extended period if something were to happen to you. The idea is the lump sum of money a life policy would provide will earn interest when invested into income-producing assets. To generate that lump sum of money, ten year term life insurance is by far the most affordable option.
Again, to find out how much life insurance coverage you need, feel free to use our needs calculator, which can be found by clicking here.
What if you want to change your term life coverage in the future?
“Blessed are those who are flexible, they won’t get bent out of shape.”
Buying ten-year term may have you wondering if you are buying coverage for long enough.
Here is the great thing about buying 10-year term life insurance that you may not be aware of. Once your policy is underwritten, the insurance company calculates your life expectancy and assigns you a health rating. This rating won’t change for the life of the policy.
If in the future, you go through a financial planning process and it is determined you need coverage for a longer period, or permanent coverage is more ideal than a term life policy, then the policy may have something called a “convertibility feature” allow you to convert some or all of it to cash value policy anytime in the future without having to prove you are insurable.
The coverage amount you convert can’t exceed the face amount of the term life insurance you own, but you can convert only a fraction of the term life policy if you choose.
Also, if you do become uninsurable for any reason and your 10-year term policy’s guaranteed premium expires, many term policies continue as one-year renewable term up to age 95 years old.
The big thing to know is the best coverage you can buy is always whole life insurance, but the life insurance rates needed to own that type of coverage is impractical for many people.
Does a life insurance company reduce term life insurance coverage based on Social Security Benefits?
No, life insurance companies don’t reduce term life insurance coverage based on receiving Social Security Survivor benefits but it is something you will want to consider when buying life insurance coverage.
If you have worked 40 quarters and are eligible for Social Security, your spouse and school aged children will be eligible for Social Security survivor benefits. This benefit is provided without an additional cost other than the Social Security taxes you have paid while you worked.
Social Security Survivor Benefits can be significant and will reduce the coverage levels you will requirte with any term policy you are considering.
When you couple Social Security survivor benefits with a 10-year term policy, you can have significant coverage for your premiums paid which can add additional peace of mind knowing you have the right coverage amoundt withou the need to pay higher premiums.
What are some other factors to consider when purchasing a life insurance policy?
In addition to the death benefit, there are other factors you should take into consideration when purchasing a life insurance policy.
Some of these include:
– The financial stability of the life insurance company
– The company’s claims paying ability
– The length of time the company has been in business
– The types of policies offered by the company
– Any additional riders or features that come with the policy
– How easy it is to contact customer service with the company
All life insurance benefits are 100% income tax free too so you don’t have to worry about beneficiaries having their benefits reduced. However, any earnings the proceeds generate will be taxable.
Conclusion
The most important action you can take is to get the coverage you need RIGHT NOW! Nobody knows the day when something happens and you no longer can purchase a life insurance policy. Worse yet, if you don’t have a policy and the person who needs the insurance dies, then the survivors will have to deal with both the untimely death AND trying to make ends meet financially.
Get coverage NOW, and 10-year term life is an affordable option. You can explore term life insurance rates, get a life insurance quote online and determine how much life insurance you need with our free online tool. Using this tool, you will be able to determine rates that apply to you, and you are sure to find 10-year term life will require the least amount of premiums to get the life insurance policy coverage you need.
Once you have a good idea of your term life insurance rates, we can help you get the best life insurance policy for your unique situation. Know that when you apply and if you can answer all the health questions on a life insurance application favorably, indicating you are in excellent health, most insurers don’t require a medical exam to receive the lowest prices for coverage. You may be able to get a term life policy within a few days of applying if you are in good health. If you have high blood pressure, you may pay a higher premium, but if your attending physician says you have it under control with medication, you will still be able to get the best coverage without a medical exam.
So get peace of mind and, at the very least, get an affordable 10-year term life policy to get the financial protection you need.
