20-Year Term Life Insurance Policy: How Much Will a Policy Cost and Is It Right for You?

Buying 20-year term life insurance can financially protect your family or loved ones. MoneyGeek analyzed 20-year term life policy rates across the largest life insurance providers to help you find a policy that can fit in your budget.

Many Americans enjoy the peace of mind they receive from life insurance, as it reassures them that their loved ones won’t experience financial hardship after they pass away. One popular type of life insurance is the 20-year term policy, which guarantees payment to your beneficiaries if you die while the policy is in effect.

By learning all of the relevant details about a 20-year term life insurance policy, you can determine if it’s the best form of coverage for you.

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What Is a 20-Year Term Life Policy?

A term life insurance plan provides coverage for a certain period. People often buy a term life policy to replace their income and save their loved ones from financial stress if they’re not there to work and provide for them.

With a 20-year term life insurance policy, you pay a fixed premium every month for 20 years to keep your policy active. If you pass away during this period, your family will receive a tax-free cash payment, which can be used to pay off any of your financial obligations.

For example, if you just bought a house on a 20-year mortgage, you can opt for a 20-year term life insurance policy and start paying an insurance premium every month or year. The premium amount will be determined by your personal profile and the extent of your coverage. If you die before the policy expires, your family will receive a death benefit, which can go toward paying off your mortgage.

Usually, 20-year term life insurance costs less than a permanent life insurance policy and provides you with greater flexibility if you want to switch or extend your coverage in the future. It’s an excellent option to cover your long-term needs.

Is a 20-Year Term Life Policy Right for You?

Generally, a 20-year term life insurance policy is a good option for you if you have a family to care for or debts like student loans or a mortgage. This type of policy is ideal for you if you have financial obligations that will end in the next 20 years.

You could buy a 20-year term life insurance policy if you have recently married and don’t want your spouse to go through financial trouble if something happens to you. It’s also a solid choice if you have young children and want to pay for their college education.

You might want to get a 20-year term life insurance policy if you have student loans cosigned by your parents. With such a policy, your parents will have plenty of money to pay your loans in case of your death.

MoneyGeek's research shows that a 20-year term life insurance policy has the following pros and cons:


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PROS

  • Level premiums
  • Tax-free death benefits
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CONS

  • No cash value
  • Temporary coverage

How Much Does a 20-Year Term Life Policy Cost?

Insurance companies determine 20-year term life insurance costs after considering various factors. MoneyGeek’s data shows that a healthy 30-year-old, nonsmoking male pays between an average of $19.78 and $35.24 monthly for a 20-year term policy with $500,000 worth of coverage. For the same policy, a smoker pays between $69.23 and $163.19 per month on average. For people with poor health, policies are generally expensive: the average cost for a similar policy is between $33.11 and $59.14 monthly.

What Factors Impact Your 20-Year Policy Cost?

20-year term life insurance rates are affected by a variety of factors. MoneyGeek’s research shows that the cost of a 20-year policy varies depending on several factors.

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    Age

    Generally, young people get cheap life insurance quotes because they’re statistically less likely to die. For older people, a 20-year policy would cost more.

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    Gender

    Statistically, women live longer than men. Hence, they also pay lower insurance premiums than men.

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    Health Status

    Generally, insurance companies look at your medical history, height and weight, smoking habits and family medical history before giving you a quote. Individuals with serious medical conditions are considered risky to insure, so they pay expensive life insurance quotes.

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    Lifestyle

    Insurance companies determine your life insurance rates by considering your driving history, criminal record, occupation and other financial factors.

20-Year Policy Costs by Coverage Amount & Age of Buyer

The 20-year term life insurance cost can vary depending on your age and the extent of your coverage. MoneyGeek researched the cost of a 20-year term policy for people of different ages looking for policies with different coverage amounts.

20-Year Term Life Cost by Coverage & Age

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20-Year Policy Costs if You Smoke or Are in Poor Health

Since smokers have higher chances of getting lung disease and dying at a young age, they are considered risky to insure and pay expensive life insurance quotes. MoneyGeek analyzed the cost of a 20-year term policy for smokers and people in poor health.

20-Year/$500,000 Term Life Cost for Smokers or People in Poor Health

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Which Companies Have the Lowest 20-Year Term Rates?

To help you save time and make a better decision, MoneyGeek researched the cheapest companies for a 20-year term life insurance policy with different coverage amounts. Our analysis shows that Transamerica typically offers the most affordable 20-year term policy with $250,000, $500,000 and $1 million worth of coverage.

20-Year Term Cost by Company & Coverage

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20-Year Term Cost by Company for Smokers

MoneyGeek analyzed the most affordable insurance companies for smokers. We found out that Transamerica offers the cheapest average 20-year term policy at all coverage levels for people who smoke.

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MoneyGeek found the cheapest insurance companies offering a 20-year term policy for people in poor health. Our research shows that, on average, Mutual of Omaha offers the most affordable 20-year term policy at multiple coverage levels.

20-Year Term Cost by Company with a Poor Health Profile

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MoneyGeek also looked into the most affordable insurance companies for seniors seeking a 20-year term life insurance policy. We found that Transamerica is the cheapest option for seniors looking for varying levels of coverage.

20-Year Term Cost by Company for 50-Year-Old Buyers

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What Happens After the 20-Year Term?

After the 20-year term ends, you can either let your policy expire, renew it at a higher rate or convert it into a permanent life insurance policy.

The decision to get a new term life policy depends on your coverage needs. If you still have your spouse or children as dependents, don’t have savings for end-of-life expenses or have a mortgage to pay, it’s often best to get a new term life policy.

On the other hand, if you don’t have any significant financial or personal obligations, you can let the policy expire.

Frequently Asked Questions About 20-Year Term Life Insurance

Knowing the answers to some frequently asked questions about a 20-year term life insurance policy may help you understand how it works and determine if it’s the right choice for you.

About the Author


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Mark Fitzpatrick is a senior content manager with MoneyGeek specializing in insurance. Mark has years of experience analyzing the insurance market and creating original research and content. He graduated from Boston College with a Bachelor of Arts and Johns Hopkins University with a Master of Arts.