10-, 20-, or 30-year term life insurance – which is the best level term life insurance plan?

Generally, this will depend on your specific life insurance needs and plans for the future. How many years of outstanding debts do you have? When are your children going to graduate and gain their financial independence? Answering these questions can give a rough idea about the level term life insurance plan that is the best one for you.

Although in the past annually renewable term policies requiring a premium raise every year, were widespread, insurance companies are now increasingly offering term policies that allow the policy owner to lock in their term rates for the whole period while the policy is in force. Thus, if a 30-year-old woman in very good health wants to purchase 20-year term life insurance, her annual premium will be level for the whole policy period.

According to figures in Table.1, the difference in price between a 10-year and a 20-year term life insurance policy, would be only 60$ a year. From the figures that Table.1 provides, we can conclude that it is generally more cost-effective to purchase a policy that locks in the same premium rates for a longer period (such as 20 or 30 years), rather than buy a shorter-period coverage.

Don't forget that you may not always be as healthy as you are now. Therefore, it is of critical importance to carefully choose the best policy period for you. You may not be able to renew the policy at the end of its term if you need to, or the rates will be prohibitively high because of your advancing age and declining health. You can always, of course, convert your term life policy to a permanent one without a medical exam.

Here is an example of the preferential prices for a healthy, non smoking 30-year-old female from New Jersey , who wishes to purchase level term life insurance with a face amount of $350,000:

Table. 1

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