What's the Best Life Insurance Term Length?

Most people need 20 to 30 years of term life insurance, long enough to cover a mortgage and support children until they're financially independent. If neither applies, match your term to the years remaining until retirement instead. Your exact term length depends on your largest financial obligation and how many years it has left.

Term life insurance works on a simple structure: you pick a length of time, called the term and pay a premium, usually monthly, for it. If you die during that term, your beneficiaries receive a lump-sum payout. If you outlive the term, the policy ends and nothing is paid out. The only real decision is how many years to buy.

Term life insurance costs depend on your health, smoking status and coverage amount. Rates increase more each decade you wait to buy a policy.

These rates are based on average quotes for nonsmokers with average weight and health ratings from our survey of major insurers. Actual life insurance premiums vary based on individual health profile, coverage needs, insurer, and state regulations. Rates shown are estimates only and don't guarantee coverage availability or pricing.

A 30-year term costs more than a 20-year term for the same coverage amount. Based on our analysis, a 30-year-old pays around $31 to $38 per month for a $500,000 20-year policy compared to $52 to $64 per month for a 30-year policy.

• Choose a 20-year term if your obligations end within 20 years or your spouse works full-time and could support the household alone. A dual-income household with a mortgage that's half paid off is a strong fit here, and the lower monthly premium is a bonus on top.
• Choose a 30-year term if you have a new 30-year mortgage or young children you plan to support for decades. A stay-at-home parent whose family depends entirely on one income needs the longer runway more than a dual-income household does.

Renewal risk favors the longer term. Buying a new policy at 50 costs more than buying at 30 for the same coverage, and health conditions that develop in between can make coverage harder to get or more expensive. Locking in a 30-year term at a younger age removes that risk.

Laddering means buying two or more term policies of different lengths instead of one large policy sized for your peak coverage need. Each policy covers you only for the years you actually need that amount of financial protection, so you stop paying for coverage you no longer need once the shorter policy ends.

A parent with a 30-year mortgage and a child who'll be financially independent in eight years is a common example. For the first eight years, they need coverage large enough for both the mortgage and their child's needs. After that, only the mortgage remains, a smaller ongoing obligation. Instead of buying one 30-year policy sized for the full combined amount the whole time, they can pair a 30-year term sized for the mortgage with a separate eight-year term covering the extra amount needed while the child is still dependent. Once the eight-year term ends, they're left paying only for the smaller, mortgage-sized policy for the remaining 22 years.

Laddering saves money when your coverage need drops partway through the term, not when it stays flat for the whole term. If your need stays flat, one policy costs about the same and is simpler to manage.

When your term life insurance expires, coverage ends, and no death benefit pays out. You have several options at this point:

• Renew your policy: Most policies allow annual renewal without a medical exam, but premiums increase based on your current age. A policy that costs $38 per month at 30 might cost $137 per month to renew at 50.
• Convert to permanent life insurance: Many policies include a conversion option that lets you switch from term to whole life or universal life without a new medical exam. This option works well if your health has declined since you bought the policy.
• Buy a new policy: You'll need to go through underwriting again, including a medical exam and health questions. Rates will be higher because of your age, and health issues could affect your eligibility.
• Go without coverage: If your financial obligations are covered and you've built enough savings, you may no longer need life insurance. Many people become self-insured by retirement age.

Insurers base term length approval on your age and health at the time you apply. Younger, healthier applicants qualify for the longest terms at the best rates. As you age, some insurers cap the maximum term length they'll offer, and a handful stop selling term life insurance to applicants 60 or older entirely.

Most insurers require a medical exam before approving a policy, and many also pull your prescription history and medical records. No-exam options exist, but they cost more. Health conditions that develop after you buy a policy don't affect your existing coverage. They can limit your options only if you wait and apply for a new, longer term later.

Term life insurance fits most adults. Permanent coverage is the better choice in some situations. Parents of children with special needs who require lifelong financial support usually need it, since term coverage would expire long before that support is no longer needed. Choose it if you want to guarantee an inheritance regardless of when you die, or if you have estate planning needs such as covering estate taxes. Permanent policies cost more than term for the same payout, so they're only worth the extra cost if one of these applies to you.

Your term length should match whichever of your obligations lasts the longest, not a default number. Buying while you're young and healthy locks in that rate for the rest of the term. If your coverage needs drop, though, laddering two policies instead of buying one can lower what you pay overall without leaving any gap in coverage.