The more common term policy lengths are 10, 20, and 30, but as we often say life insurance is not “one-size-fits-all”. For some lifestyles, there is the lesser known 25-year term length that sometimes can fit just right. Not all life insurance carriers offer a 25-year term product, but if that’s what’s best for your situation, Quotacy can make it happen.
When does a 25-year term policy make sense?
- Age – A 25-year term policy may be best when the applicant’s age excludes him or her from qualifying for a 30-year policy, but a 20-year term may be too short.
- Education – A 25-year term policy may be best when a new parent applies for life insurance to ensure their child’s college education would be covered.
- Mortgage – A 25-year term policy may be best when homeowners want to cover their mortgage.
- Flexibility and Affordability – A 25-year term policy may be best when someone in their 40s wants coverage until retirement, but find the 30-year policy a little too expensive.
- Retirement – A 25-year term policy may be best when someone during their retirement years realizes a need for coverage to cover final expenses, estate taxes, and beyond.
Let’s go over a few examples of these situations. Note: premium calculations do not include tobacco rates.
Jane Smith just turned 56 years old and has been shopping for 30-year term life insurance. Because many companies have issue age restrictions, she hasn’t been able to find affordable insurance; however, she is still young enough to purchase 25-year term which is a similar product, but at a more affordable price.
If Jane wanted to apply for a $250,000 25-year term policy at the age of 56, depending upon her health, her monthly premiums would likely range from $90 to $165.
John and Susie are in their early 30s and have two children both under the age of 3. They want to be sure that even if something happened to them that their children would both be able to receive a quality college education. A 30-year term policy may be too much coverage for them and 20-years is not sufficient, but the 25-year may be just the perfect fit.
A $250,000 25-year term policy for Susie, depending upon her health, would likely cost $16 to $30 per month.
John’s identical policy would be a few dollars more because women pay less than men since they statistically live longer.
Newly married couple Chris and Jenny bought a home together 5 years ago with a 30-year mortgage. They now realize life insurance is important to protect both each other and their investment. Buying a 25-year term policy to cover the remainder of their mortgage would be smart, and as the mortgage balance decreases their policy will be able to cover other family expenses.
Flexibility and Affordability
James is a 40-year-old who was recently promoted at his job. He wants a policy to provide coverage to protect his family’s standard of living until he retires at age 65. A 25-year term policy should do the trick!
A $500,000 25-year term policy for James, depending upon his health, will range between $47 and $98 per month.
Dennis is 60-years-old and wants to plan ahead so his children do not have to pay out-of-pocket for his funeral or any bills that may surface, such as medical expenses. He also plans for them to inherit his estate, but doesn’t want them to have to sell any valuable assets to pay the taxes. Dennis may find a 25-year term policy helpful. He can also consider adding an Accelerated Death Benefit rider to his policy which would allow him to use a percentage of the death benefit while still living if he became terminally ill.
Depending upon his current health, Dennis could purchase a $250,000 25-year term policy for $200 to $285 per month. Adding an Accelerated Death Benefit rider is typically free or a very low cost, depending on the life insurance carrier.
Term life insurance is affordable and very customizable. As you can see with the cost examples, age is a huge factor when it comes to purchasing life insurance, so don’t put it off any longer. Start by running a term life insurance quote today. You will be able to see the estimated cost instantly without having to enter any contact information. After you find a policy and price that works for you, it only takes a few minutes to apply. You can’t ask for better than that! If you have any questions about life insurance, Team Quotacy is always willing to help.
Photo credit to: Ken Teegardin