Here’s the brutal truth about life insurance agents: while a 20-year term life insurance policy will do the job for 90% of Americans, most agents will still try to sell higher-priced 30-year policies and whole life insurance.
They make more money that way!
In this guide, I’ll share why 20-year term life insurance may be the way to go.
Table of Contents:
What is 20 Year Term Life Insurance?
20 Year Term Life Insurance is a form of level term insurance that provides coverage at a fixed rate for a period of 20 years.
People often purchase this product when they aren’t sure what the future holds. A 20 year term gives you time to figure what your needs will be down the road – while providing substantial coverage in the interim.
It’s important to get coverage when you need it, and NOT having coverage isn’t an option for ANYONE who has dependents. If you can’t afford a 30 year term – start with what you can afford and supplement when your circumstances change.
What’s the Difference Between 20 Year Term Life Insurance and 10, 15, or 30 Year Terms?
They are all forms of “level term life insurance”, 20 Year term life insurance simply fixes your premiums for 20 years.
You know how medical and auto insurances seems to increase every year? Well, this doesn’t happen with 20 year term life insurance!
What’s better than locking in affordable premiums for 20 years?
Remember, each of these offerings differ when it comes to premiums and benefits to the insured and/or his/her beneficiaries.
The most popular period of coverage is 20-year term. Clients love this product because it’s inexpensive, considering the period of time it covers.
Pros & Cons of 20 Year Term Life Insurance
20 year term life insurance has both its advantages and disadvantages. Lets that a closer look at the Pros & Cons.
Pros of 20 Year Term
Below are the top 3 advantages of 20 Year Term Life Insurance Policies:
20 Year Term is the Most Practical
Think about your life 20 years from now and what do you see? Many consumers purchase 20 year term life insurance with the belief that their children will be working adults when the policy expires.
You should also be in a better financial position after 2 decades of career progression. Hey, I hope that you use that additional salary to pay down your mortgage and debts too!
Twenty year term life insurance covers the period in time when you and your family are most vulnerable. If you feel continued coverage is necessary, it’s likely that you’ll be better in a better position to afford it.
20 Year Term Policies are Inexpensive
20 year term life insurance is cheaper than a 30 year term because you are insured for a shorter period of time. 20 year term is preferable to a 10 year term because you’re not shortchanging yourself when it comes to coverage.
Peace of Mind for 20 Years
Although level term life insurance doesn’t have cash value, it does provide peace of mind. For 20 years you’ll be secure knowing that should the unexpected happen, your family will be taken care of. You can’t put a price tag on that.
Of course, the extent of your peace of mind depends on the amount of benefits that come with your policy. Always be sure you have enough coverage. I can’t stress how important this is. Depending on your debts and obligations your death benefits may not go as far as you would like.
The beauty of locking your premiums in for 20 years is that they won’t EVER increase during that time. Let’s say you get cancer in year 10, your premiums are guaranteed level for the rest of the term.
While 20 year term life insurance costs a bit more than 10 or 15 year term, it provides more comprehensive coverage if you have a young family.
If you don’t die during your term, you can still convert the policy to Guaranteed Universal Life, without proof of insurability (that is if you follow my advice).
This is an important benefit.
BEWARE: Most term policies have this conversion option built in. Make sure yours has it. Every term policy we sell has a conversion option.
Cons of 20 Year Term
There are also some disadvantages to 20 year term life insurance.
Premiums Will Increase When Your Policy Expires
With 20 year term, you’re buying a fixed, level premium for the duration you select. At the end of the 20 years, your policy doesn’t simply cancel. Instead, your premiums increase annually. So if you choose 20 years, at the end of the term, your rates will increase by as much as 5 – 10 times the premiums you’ve been paying thus far.
The lion’s share of policies actually provide coverage to age 95, however, most people drop them after the initial 20 year term because they don’t want to pay the increased rate.
At this point, you may have the option to “convert” the policy to permanent coverage, which means you can continue your coverage without proof that you’re healthy, but at a higher price.
It May Not be the Best Option for People In Very Poor Health
Twenty year term life insurance isn’t a pragmatic option if you have a serious medical condition. As I mentioned, insurance companies generate premiums based on your health rating.
In some cases, you’ll get rated more favorably if you purchase a permanent policy such as guaranteed universal life.
Shopping for Life Insurance at the End of Your Term is Costly
If your 20 year term life insurance policy has matured and you want to reinsure yourself, chances are companies will provide you with an expensive quote. Now that you’re 45 years old, you may have some health issues that you didn’t at 25.
This may mean your premiums double due to your new health rating.
Should I Buy 20 Year Term Life Insurance?
The most common two questions I get are:
- How much life insurance do I need?
- What type of life insurance do I need?
…so I’ll share a real life example with you to give you some insight into the benefits of 20 year term life insurance:
20 Year Term Case Study
A married couple in their 30’s recently asked me whether they should buy 20 year term life insurance or 30 year term.
Both of them work and they don’t have children yet, but they plan to down the road.
They inquired about a $500,000 policy for the wife and $1 Million policy for the husband.
Their main concerns were:
- Cost: 30 year term is more expensive than 20 year term life insurance.
- Children: Although they don’t currently have kids, the wife indicated she wants a policy to cover their future children, should she and her husband die while they are minors.
Since they haven’t had their kids yet, they are worried that 20 years might not provide enough coverage.
This lady is ahead of the game and thinking about the responsibilities of having a dependent or two in ADVANCE. If she and her husband died in a tragic accident, she knows the kiddos will be taken care of.
Is 20 Term Life Insurance the Best Type of Policy?
The answer is there isn’t a boilerplate generic answer.
This is yet another reason you should contact an independent life insurance agent today.
My answer depends on your PERSONAL circumstances.
If the couple in our example above is financially responsible, they pay down their debts and have their kids in the coming year – 20 year term life insurance may be perfect for them.
That being said, if they’re going to wait a while and don’t have a financial plan in place, the 30 year term might be better suited.
You also have to weigh in your age and health. What is true in your 20’s and 30’s isn’t in your 40’s and 50’s.
How to Get the BEST 20 Year Term Rates
Face it, we’re all looking to save a dime or two. Here are a few more tips to help you keep the cost of your premiums down:
- Use Our Pennies from Heaven Strategy: Learn how to save 10% – 30% on 20 year term life insurance rates by using our Pennies from Heaven Strategy today.
- Pay Semi-Annually or Annually: If you can afford to pay your premiums up front you’ll rake in 4% – 8% in additional savings!
- If you have a health issue, ask us about our “Special Case Roadshow”: If you have a tough medical condition like diabetes or history of a stroke or heart disease, chances are companies will rate you. When we get a tough case, we take it to over 2 dozen underwriters at different companies to see which one will give you the best rate. Call us at 888-603-2876 for details.
Use Our Life Insurance Calculator
While I don’t have a specific 20 year term life insurance calculator…
I did develop a needs calculator to help people like YOU figure out how much coverage you need BEFORE you speak to an agent.
Most of my clients are shocked by the numbers.
The next step is to imagine how your life might unfold. This will help you determine when you will need the MOST coverage – which will determine what policy works.
This is where financial planning comes in.
Financial planning is a big part of picking out the right life insurance product.
20 Year Term Life Insurance Quotes
Here are some sample 20 year term rates with $100,000, $250,000, and $500,000 of coverage.
|20 Year Old||$8.88||$12.81||$19.31|
|30 Year Old||$8.91||$12.96||$19.74|
|40 Year Old||$10.84||$18.02||$29.06|
|50 Year Old||$21.94||$40.16||$72.76|
|60 Year Old||$52.39||$110.17||$208.20|
|70 Year Old||$206.22||$409.53||$800.01|
*Please note all quotes are based on a Monthly premium. Quotes are for a male, in excellent health, non-smoker. Rates are subject to change.*
We have access to dozens of the top life insurance companies and know the ins and outs of their underwriting guidelines.
Why is this important?? All life insurance companies basically offer the same products right?
Nothing could be further from the truth. Some companies are far more lenient than others when it comes to pre-existing medical conditions.
We find the company that works for your UNIQUE circumstances.
A dip in your rating can mean you will pay thousands more over the course of your term.
Get a Free 20 Year Term Quote Today
The fact is, for most people, a simple 20-year term life policy from AIG Direct is the best place to start.
Runners, triathletes out there?
If fitness and personal health are an important part of your life, I recommend also checking out Health IQ.
All of us, especially those who have families, should go the extra mile to find information about the different types of insurance.
This is the best way to make sure that whatever plan you buy, it will give your loved ones the most secure future possible.
I can give you theoretical quotes out the wazoo – but the truth is everyone’s application is different. You need to have someone on your side who understands this VERY complex process.
…AND we are the very best.
I hope this article helps you navigate the pros and cons of 20 year term life insurance. If you’d like to receive a free quote, please use the Instant Quote box on the right, or call us right now for a 20 year term life insurance quote at 888-603-2876.*While we make every effort to keep our site updated, please be aware that "timely" information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Huntley Wealth & Insurance Services and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser.