How long will you need a term life insurance policy?

How long is term life insurance?

There is no set duration for a term life insurance policy. This type of coverage offers the flexibility to choose the term that best meets your needs. Term life insurance may be a good option for individuals who want financial protection for a specified period of time, such as dependent children to reach adulthood or during the formative years of a new business. However, everyone’s needs are different. Typically, policy terms range from 10 to 30 years. However, some policies may be available for as brief as one or 5 years, or as many as 40.

Factors to consider when choosing a term length

How do you know the best term length to choose? Every situation calls for different coverage, but here are some considerations that may help you select the term that best meets your needs.

• Financial obligations — The proceeds from a term life insurance policy can be used to help loved ones meet financial obligations that may be difficult to handle in case of the deceased’s missing income. The death benefit from a term life policy can be used to pay off a mortgage, education loans, credit card debt, car payments and other financial obligations.
• Dependents and family needs — If you have young children, a term life insurance policy can help protect your family financially in case of your untimely death. Ideally, a term policy would help fund living expenses until young children reach independence. If your spouse stays home to care for the children, consider income replacement and/or care expenses that would allow your spouse to continue caring for the family with consistency, either through income replacement or the funds to outsource common care activities such as driving, childcare, cooking and cleaning.
• Affordability — Most people don’t have access to unlimited discretionary income to pay for life insurance premiums. This may also be a factor when choosing a policy term length. Generally, policies with longer terms cost more than policies with shorter terms. So while you may not find a 30-year policy affordable, you may be able to invest in a 10-year policy, as it provides coverage for a critical time. Over the course of 10 years, your financial situation may change and lead you to extend a policy or add new coverage.
• Number of years you expect to work — Another factor that may help you determine the length of the term of your life insurance policy would be how long you plan to work before retiring. If you intend to provide replacement income to a spouse in case of your death, then consider how many years you plan to work prior to retiring.

Term life insurance can be a great value, allowing you to buy a lot of coverage at a reasonable price. As long as payments are maintained, your term policy will cover you for the specific time period (term) that you signed up for when you first bought your policy. But with typical term life periods ranging anywhere from one year up to 30 years, how do you decide how long you’ll need your policy?

Once you’ve answered "how much term life insurance do I need," the next step is choosing a term duration that makes the most sense for you. The following information can help you better understand the length of the policy term you should purchase.

One-year term life insurance

There are a few cases in which a one-year term life policy (also known as one-year renewable life) can be beneficial. For example, if you’re between jobs and the "employer-based life insurance" you had with your employer is now gone, this type of term policy can cover you until you’re able to find employment and new benefits. As the name indicates, this type of policy lasts just one year, but gives you the option of renewal. So when the policy expires, you can renew it for another term without having to requalify for coverage. However, your new premium will be based on your attained age.

5-year term life insurance

A 5-year term life insurance policy is often purchased to cover the cost of a short-term loan or other debt such as a car loan, a business loan or education loan. Sometimes called credit life, this short-term insurance is designed so that your loan will be paid in the event of your death. This may be a good choice if you’re concerned about leaving your loved ones with the responsibility of having to pay off your creditors.

10-15 year term life insurance

Much like a 5-year term policy, a 10-year policy is better suited if you have short-term life insurance needs, such as paying off large debts. Some individuals may choose to purchase a term life insurance policy with a 10-15-year term because it is more affordable than a permanent life insurance policy. If you’re a breadwinner with very young children and a 30-year term is unaffordable, a shorter term duration may be beneficial. There are other situations when a 10-15-year policy may be helpful.

• Families with older children – A 10-15-year term policy may provide coverage for children with middle- or high-school aged children, offering financial security until they are fully financially independent.
• Large debt – During prime spending years, families may incur significant debt such as car payments as children begin to drive, school loans for college, and/or business loans to help a growing privately-held business. These expenses can be associated with a specific season in life.

20-30-year term life insurance

One of the most common times to purchase a 20- or 30-year term life insurance policy is when your family is growing and depends on your income the most. It can provide your beneficiaries with protection to replace your income as well as pay off debts such as a mortgage and provide funds for a college education.

• Mortgage – Often, a family’s home is their largest single asset. According to SoFi, the average mortgage term is 30 years.¹ A 20-30-year term life insurance policy can help ensure your loved ones can pay off your mortgage and stay in their home in case of the unthinkable.
• Families with young children – A longer term policy can help offer financial security to your spouse and young children until they reach independence. A 20-30-year policy can provide financial security during this critical season.

30-40-year term life insurance policy

Terms longer than 30 years are not typical for term life policies. Protective is one of only three carriers offering this option. This term may allow you to lock in lower premiums when you are young and healthy that last the duration of the 30- or 40-year policy. This term duration may also offer financial security throughout the insured’s working years until they reach retirement age.

Choosing the right term length for your needs

When it comes to the “right” term life policy, it’s not one-size-fits-all. Take some time to outline items like your budget, the primary expenses your life insurance would need to cover, the length of time your loved ones would need income replacement. The following list of questions can help you get a better idea of some considerations that can help find the right insurance policy for you.

• How long until my children are reasonably financially independent?
• What is the term of my mortgage?
• How many years until I expect to retire?
• How long until my financial obligations are paid off? (student loans, car loans, small business loans, home equity loans, etc.?)
• How long am I supporting an ex-spouse with alimony and/or child payments?
• Do you currently have a life insurance policy that is going to expire?

Whether it’s one, 5, 10 or 30 years, ask yourself if the term life policy you’re considering is going to meet your needs and objectives. A knowledgeable insurance professional can help you determine the policy length that’s best for you. If you’re ready to explore a term life insurance policy, start by getting a life insurance quote online. Visit the Protective Learning Center to learn about options if your policy is about to expire.

Sources:
   1. SoFi, “What is the average mortgage term in the U.S.?” January 15, 2025.

WEB.1269.01.15