The beauty of term life is that you can
pick your length of term coverage.
The length usually runs from 5 to 30
years with 10 years being more or less
right in the middle. 5 year term
only works for certain situations so 10
year really becomes the base length of
coverage for more traditional life
insurance needs. Let's look at 10
year term life insurance and if it's
useful for your needs.
quick refresher. Term life
insurance is primarily used to replace
lost income over a period of time.
The length of term is half of the
equation while the amount of protection
is the other half. The length of
term that choose is entirely dependent
on your particular situation. As
we discussed in the
5 year term life
article, that is probably too short a
period of time to cover traditional
needs in case someone passes away.
10 years is approaching the sweet area.
Let's see what situations work well with
10 years of term life.
insurance (either additional
or for the first time) with middle age
children...say age 12 and 14, then 10
years may be ideal. 10 years of
term should take you out to the point
that both children have graduated for
college. Getting children through
early adulthood is a common concern that
drives people to shop for term life
insurance. 10 years might not be
adequate if you have a new family with
very young children but might ideally
address a mid-life family.
has a big impact in people choosing 10
years of term life and age is a primary
insurance rates. Again,
the length of term and amount of protect
act like a see-saw. If you want to
keep the monthly premium at a certain
amount you can lower the term length to
increase the amount of protection and
vice versa. If the amount of
coverage is more important, some people
will reduce the length of term and 10
years is usually the lowest length of
time they are willing to go.
This isn't exactly a bad
strategy...especially if your in your
40's or 50's and 10 years take you out
almost to the Medicare.
year could also work if you are a good
part through a family mortgage. If
you have 10 years left, buying to 10
years of term addresses the ability to
pay off the mortgage for your loved
ones. For most families, the
mortgage is the largest debt or monthly
expense they face that is less flexible.
are also some business uses for 10 year
term. This length of term might be
ideal with a new venture or business.
Let's face it, if your company can make
it past 10 years than you are doing
significantly better than the average.
The most critical time is the initial
start-up period and 10 years provides a
cushion to insure that the loss of a
critical person (also called
key employee life
insurance) does not wreck the
company. The benefit can be
used to find a replacement or float the
company's finances during such a
in mind that if you choose 10 year term
life and come to the end of the policy
term, you would likely need to
re-qualify based on health and the cost
will be significantly higher at your
older age. When you run your
insurance instant quote,
double-check 10 year versus the next
step-up which is 15 years. Make
sure there's enough difference in
pricing not to go with 15 years at the
desired amount of life insurance.