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How Long does Term Life Insurance Last?

By Compuquotes Team on March 26th, 2008

Term life insurance is an insurance policy that is active for a set term. This means that your policy will last only as long as you intend it to last, and will expire after the end of that time. In some cases, you can pay extra during the term of the policy and get your payments refunded to you at the end of the term, which can be a great investment. So how long are these terms, exactly?

The terms of the policy depend entirely on your own needs. The policies can and do range from only a year to thirty years, and are good for various expenses and debts among other things. There are many reasons to consider term life insurance, and many different lengths and levels of coverage to choose from.

Why would I want a one year term?

If you have a family, then you want to protect them from expenses incurred by your death, correct? During certain parts of your life, however, you may be making more payments of loans or other debts that your family will eventually be responsible for. In order to protect them, you will want to increase your insurance to offset the debts. How does this work? Let us assume that you want to buy a car, and that you set up the payments so that you will pay it off over the course of one year. This might be fine for you to handle, but if you were to pass away, could your spouse handle the payments? If not, you may want to get a life insurance policy that will cover the cost of the car so that your spouse can pay it off. This policy would not need to last for more than the year.

The purpose of a short term policy like this is to offset a loan or risk of any other kind that is likewise short term.

So why would I need a thirty year policy?

One of the biggest reasons that we can think of for a thirty year policy can be summed up in a single word: mortgage. If you are paying the mortgage on a house, then you will want your spouse to be able to continue to make payments once you are gone. This is where the term life insurance policy comes in. Most mortgages, though, are not for terms of any longer than thirty years, making a longer policy unnecessary.

Another great reason for a larger policy is your family. If you are just beginning to have children, and you plan to have a couple and to space them out, then it might be thirty years before they are out on their own and taking care of their own business. This is a good reason to have a long term policy in place to catch your young family and keep them stable while the children grow up and are able to leave the nest eventually.

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