When applying for life insurance, one key decision is choosing the policy length. Should you get short term or lifelong coverage? The ideal life insurance term depends on several factors.
Consider Your Age
Younger applicants in their 20s to 40s generally benefit from longer 10, 15, 20 or 30 year term life insurance policies. Longer terms lock in low rates now that you’ll pay over time. Short term policies of 2-5 years make less sense for young buyers as premiums would jump significantly upon renewal.
Those in their 50s and 60s may lean towards shorter term lengths from 5-20 years. Rates rise more rapidly as you age, so shorter terms delay bigger premium spikes. Permanent life insurance also becomes an option if wanting lifelong coverage.
Think About Financial Goals
Align the term length with major financial goals or obligations you want to provide for.
For instance, a 20 year term can cover a mortgage payoff or fund kids’ university costs. A 10 year policy may work if solely needing income replacement. Match the term to when coverage will be most vital.
Consider Health Changes
While difficult to predict, look ahead to any expected major health changes that may make renewing life insurance difficult down the road.
For instance, a history of cancer or heart disease in your family. A longer term now means you’re covered even if your health declines later.
Weigh Premium Costs
Compare premium costs for different term lengths. Longer may cost less per year than shorter terms.
For example, a 20 year £250,000 policy may cost £18 per month. A 10 year policy might be £22 per month.
The longer term has lower premiums and locks in rates for more years.
Account for Income Duration
If life insurance is replacing lost income, base the length on your remaining working years before retirement.
For instance, if planning to retire at 65, a 20 year term for a 45-year old would cover needs until retirement.
Consider Permanent Policies
Those wanting lifelong coverage could supplement term insurance with a permanent policy, or convert to permanent insurance when term renewals get cost prohibitive.
A permanent policy means lifelong protection without renewal, but costs are higher.
Review Regularly
Revisit your term length decision periodically. Life stages and goals shift over time. What made sense originally may require fine tuning later.
Choosing the right life insurance duration involves weighing multiple personal factors and future uncertainties. Avoid going just for the minimum length to save money now. Think long term, but reevaluate to adjust to life changes. A wise term length balances protection and affordability both today and down the road.