When we talk Term Life Insurance how do we decide on the value aspect of a Plan? When it comes to a Term Life Insurance Plan, the longer the term is sometimes better.

 Many clients compare 10-year-Term Life Insurance Plan premiums with 20-Year or 30-Year Life Insurance Plan premiums and take out a Term 10 policy because of the lower premium. Unfortunately, a lot of these clients end up paying more in the long run. For example, if you are in your 20s or early 30s a 10 Year Term Plan will only provide you with coverage at that premium until your 30s or 40s. But most clients require coverage until retirement age which is the national average of 67 years. Amortization periods on Mortgages are usually 25 or 30 years – which means your Term 10 plan is not going to provide you with the length of coverage you need. 

You should consider either a Term 20 Plan or Term 30 Plan if any of the following pertain to you;

  • Have not yet had children or not finished having children, who will be financially dependent on you for more than the next 20 years.  
  • Have debts or a mortgage that won’t be paid off in 10 years.
  • Don’t want to go through underwriting again in 10 years, or worried about your insurability. 
  • Want affordable coverage with level premiums for the length of time you need insurance.

Here is an example to put it into perspective. 

Mary and Charlie, are both 30 years old, young professionals with two children, Caitlyn, age 5, and Mason, age 3. They recently bought a house with a 25-year mortgage. They also have outstanding student loans and a line of credit. Mary and Charlie have had the talk if one of them should die unexpectedly. They want to make sure they are properly protected while their children are growing up and still dependent on their incomes so they decide to purchase term life insurance. 

They have two choices: 


If they purchase a Term 10 Plan, they’re assuming their need for life insurance will end in 10 years. Unfortunately, the chance of this being true is rare. 

They may also assume they can re-write a new Term-10 Plan before the renewal date. But they’ll be taking the gamble that their health will be the same in 10 years and prices will be comparable to what they are paying today. An insight into renewal rates; if they are to take out a Term 10 Plan and renew it for an additional 10 years the total cost to provide 20 years of coverage will be more than an initial Term 20 Plan in the first place. 

So, we look at the second choice;

A 20-year Term

By applying for a Term-20 insurance plan, Mary and Charlie are assuming their children will be dependent on their income for more than 10 years and that their need to protect their family from financial loss requires a longer term since they have young children, a mortgage, and other debts. 

As a result, they’re willing to pay a little more today for a Term-20 to eliminate the risk of being uninsurable in 10 years when they still need financial protection. They are also making sure that their premiums remain affordable throughout the 20 years that they need coverage. 

It just makes sense.

If you have any questions, please contact one of our brokers at Centre Street Insurance we will be happy to answer or find the answer to questions related to this topic.