Life insurance is a coverage type that offers your family some financial stability during the period of your death. However, before you decide to purchase this coverage policy, there are several questions that you should ask yourself. And the most important of it all is How Long Should I Have Life Insurance.
Generally, the duration you should have life insurance will be determined by what you need to cover. Several individuals have two common reasons they need a policy which are to cover a mortgage and offer financial coverage for their families when they die. In this article, we will elaborate more on the duration you should have life insurance with other related options.
How Long Should I Have Life Insurance
The duration of life insurance would depend on several factors like your income, debt, and number of dependents. If you recently purchased a residence or have more debt, you can decide on a coverage length that fits how long you intend to spend settling the loan.
Additionally, if you have little kids, you might want to consider getting coverage that might reimburse you until your kids are independent. Furthermore, you get to choose to get permanent policies if you need coverage that would cover you after your retirement age.
What Term Length Should I Get
You can select either term or whole life insurance when deciding the term length that might suit you. Term life coverage offers you the ability to decide your coverage duration which ranges from 10, 15, 20, or 30 years. Also, some insurance providers can offer this coverage type up to 40 years.
Meanwhile, permanent life insurance offers different kinds of coverage that reimburse even though you die as long as you pay premiums. In addition, this enables you to have coverage for the rest of your life. However, you need to know what term length suits your needs by considering your existing financial responsibilities and outstanding debt.
It may be more beneficial to have a plan that lasts a little longer than you need than to have to buy a new one when the current one expires. Furthermore, when choosing term length of life insurance; remember that you are getting coverage to protect your family’s future when you die.
Types of Life Insurance Term Length
The most common term lengths are 10, 20, and 30 years which fall under the category of term life insurance. Most individuals select a term that will cover them during periods of significant expenses like when their children are growing or settling mortgage. However, your term life insurance policy should only cover the duration of those expenses and remaining debts.
From shortest to longest, these are the most typical term lengths;
Annual renewable term coverage
An annual renewable coverage is known as a one-year coverage option with yearly renewals. They can be helpful for people looking to improve their habits or health, even though they are more expensive than traditional term coverage.
5-year term coverage
Although not all insurance providers offer 5-year term coverage, individuals wish to cover short-term financial responsibilities. This may include a business or auto loan, and may find value in purchasing a policy with this duration.
10-year term coverage
Generally, if you need coverage for a shorter amount of time but are an older adult without children or other responsibilities, a 10-year term life insurance policy can be a good choice.
20-year term coverage
20-year term life insurance is the most common option for term length. In addition, it works well for families with one income or for parents.
30-year term coverage
A 30-year term coverage policy is a great option for those who have long-term debts such as mortgages. Moreover, parents who have very young children would also find this coverage a favorable option for them.
How Much Life Insurance Do I Need
Most individuals do wonder if they need life insurance and if so, what coverage type they require. If an incident were to occur the following day, would your loved ones bear the brunt of your current financial situation? The answer depends on your situation.
The coverage amount that seems necessary is determined by your existing financial circumstances. You want to ensure your children fewer than 18 living at home are well-cared for. It’s crucial to specify the exact age at which you believe they become dependent on you. Even though they are older than eighteen, they continue to live at home and attend school full-time.
How Long Should I Protect My Mortgage
It’s reasonable to get life insurance over the same period if you’re doing so specifically to pay off your mortgage. For instance, your life insurance policy should reflect your intention to pay off your mortgage over 25 years. However, remember to check your policy whenever you make changes to your mortgage.
Final Thought
If you’re buying life insurance to make sure your family will have enough money when you die, you might want to consider matching the term to the point at which you think they can handle the household finances without you. For instance, you may wish the coverage to continue long enough to support your kids through their full-time education. You may want to factor in longer-term financial dependence if you anticipate your partner will need assistance for a longer period.