How Long Should I Have Term Life Insurance?

iQuanti: One of the things that makes a term life insurance policy so affordable is the flexibility of how long coverage can be purchased. Most contracts will be in effect for five to 30 years and are generally bought in five-year increments. If you're considering getting term life insurance, here are a few factors to consider when determining how long your policy should last.

Who Do You Need to Protect?

The first thing to consider is who would benefit from this type of life insurance policy. For example, if you and your spouse are young and in your 20s, you may be just starting out and beginning your family. Therefore, a 30-year policy could be a good choice because it will likely be a few decades until the kids have grown up and moved out, and you're ready to stop working.

Meanwhile, a couple in their late 40s or 50s may already be empty nesters and getting close to retirement. In this situation, they may not need 30 years of coverage, so perhaps a 10 or 20-year contract would be more appropriate.

Would You Like Living Benefits?

Although it's not very well known, you don't necessarily have to pass away to utilize some of the death benefits of your term life insurance policy. There are special add-ons called "riders" that can be used to enhance a life insurance policy. These riders will let you use a portion of your death benefit while you're living to help alleviate the financial burden of certain circumstances. Here are a few examples:

• Terminal illness rider - Can be exercised if you've been diagnosed with a condition that leaves you with two years or less to live. Your death benefits may be used for qualifying medical expenses or even to take a trip to places you've always wanted to visit.
• Critical illness rider - Covers qualifying medical expenses related to illnesses that can shorten life expectancies, such as a heart attack or stroke.

Depending on your age and the probability that you may encounter one of these situations, it could make sense to purchase the longest term life policy possible.

Do You Wish to Leave a Legacy Behind?

Finally, deciding whether or not to set up an inheritance for your loved ones can impact how long you'll need your term life insurance policy to last.

Consider that the average life expectancy in the U.S. is 77 years old (source). If you're already in your 50s, then buying a 30-year term policy could be a smart move because, like it or not, there's a high probability that you may pass away.

While no one wants to think about their own mortality, consider the financial legacy you could leave behind for your children or grandchildren. This death benefit could be used to help them buy a home or send your grandchildren to college. This, of course, should only be done if the cost of the premiums is reasonable and fits within your budget.

The Bottom Line

The length of the term life insurance policy you buy will depend on the personal needs and goals of you and your family. Consider who you're protecting and what you'd like to leave them after you've passed on. Additionally, you may want to opt for the longest term life insurance policy you can get if you're interested in the living benefits it can offer, such as a terminal illness or critical illness rider.

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