Best term length for life insurance?

Question

Looking to get term life insurance in the wake of a growing family. I'm 27 and looking to cover for my wife and daughter. So what is the best term length to be looking at? Most default to 10 or 20, although they seem to be out there up to 30 years. Obviously, longer the term the higher the premiums, but it is good for longer.

Looking for well reasoned analysis for someone who knows what they're talking about...

Answer 1

Use common sense, arithmetic and figure this out for yourself. You're 27 and you wife is .. and your daughter is .. In ten years you'll be 37 your wife .. your daughter.. but at 37 you'll need to reapply for life insurance or convert your existing policy (all re-computed for age 37) to a UL or WL policy paying a higher rate. Now do the same math for a 20 or 30 year term.

When I was around your age I bought a 10 year 100K term policy; I outlived the policy and my financial needs outgrew 100K.

If I were you, I'd pick a large enough amount (say 500K) and purchase the 30 year term. That way you won't have to worry about another policy until you're 57, your daughter is an adult and your wife .. is still lying about her age ;)

PS There are over 1000 Life companies in the US, Plenty of them offer 30 year term so shop around; I find Primerica very pricey and their operators very shady.

Answer 2

It depends on what your insuring against. Are you looking to replace income, or just cover final expenses? Keep in mind that the older you get the lower your expenses may get (chances are at 85 you won't be doing a lot of worldly travelling or anything like that). Also, contrary to the previous answer about you getting the pension after he dies as a "probably", that all depends on the type of pension. some pensions don't pass on to the spouse, some pensions only pass along 50% of the pension to the spouse. Make sure you understand the consequences before you plan you're insurance around it. The biggest factor you need to look at is the probability of when he will die. What's the family history? What's your husbands health status? Is he a smoker? If he's a healthy non-smoker and both his parents lived into their 80s, there's a good chance the 30 year would be the better option. If he's a smoker with high blood pressure and diabetes...just like his parents and they died and 69, then there's a good chance he's heading for the same route... Have you compared a price on a term to 100 policy? with medical advancements and a push for more active lifestyles and more healthy diets, a healthy 55 year old could have a reasonable expectation to live into their 90s these days. Not sure what your budget is, or what you're family history is, but that might also be an option. Keep in mind, the best insurance policy is not always the cheapest. The best policy is the policy that is in force at the time of death and pays out a claim to cover whatever the need was...whether it's term 10, 20, 30 or whole life, if it pays out the claim it will be worthwhile and do what it was supposed to do.

Answer 3

Length of term really depends on the financial needs of the client. I don't know how much you have saved and how much debt you have, but you are probably like everyone else who has lots of debt to pay and not much saved. There's only one company out there that sells a 35 year term and that's Primerica.

Primerica is not a life insurance company, but a financial service company. They are a member of Citigroup and they only serve middle income families. Through a confidential, customize, and complimentary Financial Needs Analysis (FNA), they can determine how much coverage you need, figure a way to get you out of debt as soon as possible, help you figure out what type of investments you should be investing in, and help you plan for realistic goals that you can afford. The FNA will contain some other data such as what is your assets, what is your liabilities, and from that, it can determine your net worth. It will also analyze how long your savings will last when you begin withdrawing it for retirement. I think everyone should get a FNA done.

While you have term insurance, you should consider investing into a tax-deferred accounts such as IRAs on a monthly basis. If you understand the dollar cost averaging concept, you would see why its better to invest on a monthly basis instead just once a year.

I personally own a 30 year term insurance at Primerica and also open my Roth IRA there as well. You can put in as little as $25/month or as high as $333.33/month (current maximum contribution to an IRA set by the IRS is $4000. Next year it will be $5000).

Now I work at Primerica and teaching others what I know. While some of my friends and family think the company is a scam because I'm always recruiting people (they don't understand how business works). They did like what I was able to do for them. If I never joined Primerica, none of them would take the time to start planning for the future or realize how big their debt problem is. Many people have lots of credit card debt and most of them just pay only the minimum. Many families own the wrong type of life insurance and majority of them are under-insured. Many families don't have much money saved.

You know the funny part of all this, most my clients didn't have to spend more money for my help. I just moved money around from one area into other areas.

Answer 4

You want the longest term you can get at a reasonable price. I don't know of anyone who sells more than a 20 year term, except for Primerica. I have NO first hand experience with them, but have heard they're a multi level marketing based company - which is NOT what I want in an insurance company, so I wouldn't buy from them anyway.

You want the LONGEST term you can get, with a guaranteed renewable & convertible endorsement. Term insurance is "pure" insurance, so although a 20 year term might cost more than a 10 year, it's not THAT much more. When I bought mine, the difference was under $20 a year.

Answer 5

I like the one that said for you to tell him your date of death.

Seriously, I would opt for the 20 year plan. A 30 year plan can be obtained with a number of companies. However, at the end of 20 years, your family should be well established and you can re-evaluate where to go from there.

You hear advertising for 30 year term plans that promise to refund your premiums in 30 years if you are living. STAY AWAY! There are alternatives available that offer you much more in the way of a refund, and have much more flexibility.

There will come a point where your needs and outlook change, and you will want to find a way to learn more about the options available to you. That is a learning process and you have years to inform yourself.

You may find an entirely different approach to your question by reading 'Missed Fortunes' by Douglaw Andrews.

Good Luck.

By the way, send me a response if you want a quote.

Answer 6

You seem to know what you want the insurance to do. That is fantastic!

Do you own your home? How old is your youngest and are you planning to send the kids to college? Do both you and your wife work?How many debts do you have right now? Do you see any other debt in five to ten years? Funeral expenses average about $6500, for burial, and less for cremation. Is it a longer period of time for your kids to go to college or for you to pay your house completely off? I know you probably won't stay in the same house but think now of how long it would take to pay it off if you stayed there.

If it is longer to pay the house off, at minimum you want coverage for that length of time. I would even consider adding five to ten years from that, just in case. Realistically, at 27, you should be looking at 30-35 year level term. Only Primerica offers 35 year level term,that I know of. The other positives from their policies are that a spouse can be placed on the same policy as that of the primary owner and children can be covered, on same policy, for 1k- 25k, up to $15 per month. Oh yeah, this children coverage covers kids you have now and others you plan to have, for same price. By having wife and children on the policy, you save policy owner fees that other companies would charge for multiple policies.

ANY insurance agent here works for an MLM company. Especially, if you receive bonuses from people you take out into the field and train. More especially, if you are an owner of an independent agency- I KNOW you earn bonuses off the people in your office. That alone qualifies you as an MLM company. Even more if you recruit people.

Answer 7

I thought that the longer term will attract lesser premia for the same sum assured. And the earlier you insure (the younger you are) the lesser the premium. First decide the amount of insurance which you need. That amount should be such that in the unfortunate event of the insurance claim maturing early, the income that comes from investing the sum assured should be equal to the monthly income, so that your wife and daughter are taken care of.

Answer 8

First of all the amount of coverage is more important to your family when you die than the type of coverage you had at your death. Secondly make sure your policy is "convertible" for the entire duration of the term and you won't need to stress about the duration as much.

Now you can explore less important items like the duration of coverage. Talk to someone who will ask you enough questions to find a good fit.

I enjoy unique marketing positions as much as the next guy, but a good broker will be able to design any length of guaranteed premium you need.

Answer 9

Tell me when you are going to die and I will tell you the best term. Also tell me the financial consequences that you will leave behind at your death (debts, lost future income that your family needs, desired legacy) and I will tell you the correct amount of insurance to buy.

Go talk to a licensed agent.

Answer 10

20 years $35,000