How Do You Decide How Long a Life Insurance Policy You Need?

If you are looking to buy a term life insurance policy, one of the biggest decisions you need to make, aside from how much coverage you might need, is how long your policy should be. After all, the point of buying term life insurance is to ensure that your beneficiaries are protected in case something wereto happen to you.

So how do you decide how long a term life insurance policy you need? Well, keep in mind that when it comes to term life insurance, most terms are between 1 and 25 years, although you might be able to get a 30-year or even 40-year term life insurance policy, depending upon how good your health is.

Length of policy depends on various factors

Generally speaking, the younger you are, the longer the life insurance policy you may be able to get. After all, if you are 80, you are not going to be able to get a 25 year policy, but if you are 25, you have a much better chance.

Aside from that, you need to think of a variety of things when it comes to the length of the life insurance policy you may want. The idea behind term life insurance is to cover your beneficiaries – you spouse and/or children – if you were to pass away prematurely. Many insurance agents represent that you buy the equivalent of seven to 10 years of your annual salary, to replace your income. After all, your family has many expenses to take care of that your salary may cover, from health insurance to tuition to mortgage payments to credit card debt to car payments.

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However, if you are retired, your kids are grown, and the house is paid for, your expenses will be lower. Plus, thanks to investments and retirement plans, you may be effectively self-insured. What that means is that you have enough money saved so that if you were to pass away, your loved ones would be fine without you.

Cost of policy may be a factor

Another determining factor in the length of the life insurance policy you might get is the cost of the policy. Do you really need a 30-year life insurance policy if the cost is prohibitive, and you will have your house paid for and your debts taken care of in, say, five years? Monthly or yearly premiums that cripple you financially may not be a smart financial decision. It is important to find a life insurance policy that not only protects you and your family but that fits into your budget. So keep this in mind when shopping for a life insurance policy.

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