Preparing for the unexpected isn’t always easy. But when you’re a parent, you often do it without even realizing it: You pack a rain jacket even when the forecast calls for clear skies. You pad your emergency fund when you can.
Term life insurance is another strategy to prepare for the unforeseen. With the right policy, you can help make sure your family has a safety net in place—and it doesn’t have to be difficult or complicated.
Life insurance is an agreement between an insurance company and you, the policyholder, that covers your risk of death. That means if you die while your policy is active, up to date with payments and you meet the policy's criteria, your beneficiaries will receive a lump-sum payout.
Term life insurance comes in various lengths—most often in terms of 10, 15, 20, 25 or 30 years. That’s different from a whole life insurance policy, which is sometimes also called permanent life insurance. Whole life insurance pays a death benefit to your beneficiaries no matter when you pass away.
Whole life insurance also has a “cash value” component that builds value over time, which you can access while you’re still alive. Term life doesn’t have this cash value component, but most people choose it because it’s very significantly less expensive than whole life.
Term life insurance lasts for the length of that term, so if you buy a 30-year term policy when you’re 30 years old, your beneficiaries would receive a death benefit that could help secure their financial future if you died between the ages of 30 and 60. During that 30-year term, you’d pay annual or monthly premiums to the insurer.
“Term insurance is ideal for someone who is looking to get the most bang for their buck,” says Jason Dall’Acqua, a Certified Financial Planner and founder of Crest Wealth Advisors. “Term premiums are lower than permanent insurance premiums, while allowing the person to obtain significant coverage.”
A 30-year term is typically the longest term available, and it provides your family a measure of security that lasts for an extended timeframe. When you buy a term policy, you also lock in today’s premium, which means you don’t have to worry about rates rising through the years.
“Compared to permanent life insurance, 30-year term insurance is a less expensive, practical way to keep you and your loved ones secured for the next three decades,” says Nick Schrader, an insurance agent with Texas General Insurance.
Life insurance is highly individual and there’s no one-size-fits-all approach. It’s important to evaluate a policy with your unique family in mind, so that the policy you choose covers your needs. The good news: You’ll find a variety of options to choose from.
While every family has its own set of concerns and priorities, there are certain situations in which a 30-year policy often makes sense. People in these scenarios may find a 30-year term to be a good fit:
For younger, recently married couples, a 30-year term is likely to last until you’re close to retirement and can help a surviving spouse pay off debts, care for children and remain on solid financial footing. “Young newlyweds are just starting to combine most of their finances,” Schrader says. “The 30-year term insurance can protect them if there is a job loss and they still have home loans to pay or simply get them through their day-to-day expenses.”
A life insurance term that lasts until your children are grown and self-sufficient can help ensure that in your absence, your partner will still be able to pay for their care, college tuition and other needs. (Here’s what people with young kids should know about life insurance for parents.)
Big life changes often bring about new insurance needs, and the purchase of a home is one of them. If you have a 30-year fixed-rate mortgage, a 30-year term can help your family continue to pay off the mortgage and remain in the home.
Stay-at-home spouses have unique life insurance needs, and so do their working partners. If one partner in your household is the primary earner, a 30-year term policy can help keep the surviving spouse financially stable until retirement.
Choosing the right policy is a big decision and it requires giving careful thought to your family’s needs, future plans and lifestyle. It’s important that your policy suits your family’s situation so that no matter what curveballs life throws, your loved ones can stay on track.
To make sure your term length is right for you, take into account the following:
The ages and needs of the dependents in your care—these loved ones might include your spouse, children and aging parents
Your family’s current budget and the lifestyle you want for them
Outstanding debts, including mortgages, student loans and car loans
Your family’s financial goals
Another important factor to consider when you’re evaluating life insurance: You need a policy that fits your budget. Term life insurance is meant to add protection to your family’s financial health, so you know your loved ones will have what they need, even if you’re no longer around to provide it.
While life insurance may seem like one more expense that you’d rather not add to a budget that’s stretched thin, term life insurance policies are more affordable than many people expect.
A number of factors affect your rate, including term length, coverage amount, your age and your health. A term policy that covers 30 years costs more than a policy that covers a shorter term, but a 30-year term is still less expensive than whole life insurance.
Fabric exists to help young families master their money. Our articles abide by strict editorial standards.
Fabric by Gerber Life exists to help young families master their money. Our articles abide by strict editorial standards.
Information provided is general and educational in nature and is not intended to be, and should not be construed as, financial, legal, or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. We make no warranties with regard to the information or results obtained by its use, and disclaim any liability arising out of your use of, or reliance on, the information.
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Term Life Insurance Policy Series ICC22 2205-4004 WSA and Accelerated Death Benefit Rider policy series ICC22 2205-2623 WSA (and state variations where applicable) issued by Western-Southern Life Assurance Company, Cincinnati, OH which operates in DC and all states except NY, and distributed by Gerber Life Agency, LLC using Fabric Technologies. Gerber Life Agency, LLC is an affiliate of Gerber Life Insurance Company (est. 1967). All are members of Western & Southern Financial Group (Western & Southern). Issuance of coverage for Term Life Insurance is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Product provisions, availability, definitions and benefits may vary by state. Payment of benefits under the life insurance policy is the obligation of, and is guaranteed by, the issuing company. Guarantees are based on the claims-paying ability of the issuer. Products are backed by the full financial strength of the issuing company.
All sample pricing is based on a 30-year old F in Excellent health for the coverage amount shown and a 10-year term policy, unless otherwise stated. Gerber Life Agency, LLC (GLA) is an insurance agency licensed to sell life insurance products. GLA will receive compensation from Western-Southern Life Assurance Company for such sales. The NAIC Company Code for Western-Southern Life Assurance Company is 92622.
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