Why 30-Year Term Should Be Your First Choice

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A 30-year term life insurance policy comes with two guarantees: your premiums and death benefit will remain fixed for 30 years. In other words, 30-year term allows you enough time finish paying your mortgage, get your younger ones to graduate college, and even build adequate savings so that you will not need the coverage in 30 years.

You get peace of mind now at an affordable fixed rate and can decide later if you need to keep it or not. In this post, I will go over the 30-year policy types, associated costs, and who should or shouldn’t get it.

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What Does a 30-Year Term Life Insurance Policy Mean?

A 30-year term life insurance ensures level death benefit and premium payment for 30 years. If you pass away during that period, your beneficiaries will collect the death benefit, and if not, you will be able to convert your policy to a permanent plan, renew it annually, or drop it. Just like any other term’s length, whether its 5, 10, or 20 years, you only pay for the cost of insurance (COI) and nothing more.

There is no cash value accumulation or saving component. Simply put, term life insurance offers the most economical solution because you are paying for “pure insurance” without any of the bells and whistles other permanent coverages provide.

What Happens When the 30-Year Term Ends?

Technically, a term policy doesn’t expire until you reach the age of 95. The only thing that expires is the guaranteed level premium amount you enjoyed paying during the last 30 years. Now what?

  1. Renew the coverage on an annual basis (ART) until the age of 95 (in most policies).
  2. Convert it to permanent coverage or universal life insurance without proof of insurability or going through underwriting.
  3. Buy a new coverage, provided you are healthy enough to qualify for one.
  4. Drop the current policy since there is no need for it.

Who Should Buy a 30-Year Term

  • If you have a 30-year mortgage or another bank loan for 30 years, you are doing yourself an injustice by obtaining a shorter term length. I get this often from clients: “I’ll just buy 10-year plan now, and in ten years I’ll get a new policy.” My answer is, “What if you aren’t in good health to qualify for one?”
  • If you are in your thirties or younger, buy a 30-year term. Even if you don’t have the outstanding mortgage or other loans to justify a longer-term but you may have someone who depends on you financially, a 30-year plan is the safest route to take. Secondly, the price difference between a 10-, 20-, or 30-year term at the age of 30 isn’t high, and procrastinating the policy’s purchase, once you are in your 40s or 50s, would cost a lot more. For instance, a healthy 30-year-old male would pay $13.76 for a $500,000 10-year term, $20.12 for a 20-year term, and $32.29 per month for a 30-year term.
  • If you need more extended protection but can’t afford the alternatives, such as whole life or universal life policies, then buying the most extended term possible makes sense as long as you can afford it.

Who Should Avoid Buying a 30-Year Term

  • If your goal for buying life insurance involves estate planning or leaving a legacy, term life shouldn’t be on your negotiating table. Temporary protection, as attractive as it may be price-wise, isn’t the ideal solution.
  • If you are over the age of 60 and need a 30-year term, you will not find a carrier who sells it. The maximum duration at that age is 25 years. You may need to look for a guaranteed universal life policy that offers coverage based on age rather than term period.
  • You can’t afford it. Buying a shorter term is still better than not having any coverage.
  • You need a specific term for distinct protection. For instance, you pay your daughter’s medical school tuition for the next ten years. You have no other debts or reason to shield anything other than the college tuition. There is no need to throw your money and buy a 30-year term. You can buy a 10-year policy.

Should I Get a 30-Year No-Exam Policy?

As the name implies, no-exam life insurance does not require an applicant to undergo a physical exam, blood, saliva, or urine samples as part of the underwriting process. If you want to save money on life insurance, don’t skip the exam. Buying no-exam coverage not only costs more, but your death benefit will not exceed $500,000 with most companies. If you still want to skip the exam, look into applying with companies which offer an accelerated underwriting process.

The Accelerated Underwriting Process

If you are in good health without any significant pre-existing health conditions and under the age of 50, you may qualify for an accelerated underwriting process. The process includes a phone interview conducted by the underwriter and a collection of publicly available data to verify your identity and determine your eligibility for coverage.

At the end of the interview, there is one of the two outcomes: Your policy is ready for issuance, or you will have to go through the traditional underwriting process which includes the exam.

The good news is that, with this process, you will not pay extra for no-exam policy (and still may qualify for one) and you can get up to $1,000,000 of coverage with a few companies (which isn’t available with most traditional no-exam policies). We work with companies such as Banner and North American among many others which provide the accelerated underwriting process.

30-Year Term Life Insurance Sample Monthly Rates

sample rates

30-Year Level Term Male

 AGE$100,000$250,000$500,000$1,000,000
 20$12.94$18.49$30.96$51.80
 30$12.99$19.78$32.29$57.36
 40$17.89$29.67$52.46$100.38
 50$36.81$70.05$125.13$254.84
 60$281.96$693.50NANA
 70NANANANA
 80NANANANA

30-Year Level Term Female

 AGE$100,000$250,000$500,000$1,000,000
 20$11.18$15.48$22.79$41.30
 30$11.52$16.78$27.19$47.16
 40$15.88$24.72$42.49$79.58
 50$28.90$52.25$97.18$186.56
 60$281.96$693.50NANA
 70NANANANA
 80NANANANA

30-Year No-Exam Male

 AGE$100,000$250,000$500,000
 20$12.94$20.34$32.89
 30$13.29$22.01$34.28
 40$19.90$33.02$55.72
 50$39.78$77.04$141.99
 60NANANA
 70NANANA
 80NANANA

30-Year No-Exam Female

 AGE$100,000$250,000$500,000
 20$11.92$17.27$25.12
 30$12.82$19.03$28.62
 40$17.87$27.51$45.58
 50$31.94$58.14$103.23
 60NANANA
 70NANANA
 80NANANA

Bottom Line

Term life insurance is probably the most affordable, straightforward coverage you can find. Choosing the initial period 10, 20, or 30 years is a cause of confusion with most individuals. Your circumstances, affordability, and your overall health should be communicated to your broker so that he/she can suggest the best policy for your needs.

Since life insurance rates are primarily determined by your health, driving history, and lifestyle habits among many others, you need to compare prices from more than one company. You can give us a call at 866-326-3053 for unbiased life insurance quotes from more than 50 companies, or go ahead and use the quote engine on the right-hand side to receive instant rates.

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2018-09-01T16:12:20+00:00August 27th, 2018|Categories: Types of Life Insurance|0 Comments

About the Author:

Ron is a licensed life & health insurance broker. He has two amazing rescued Pitbulls. He also enjoys real food, heavy squats, critical thinking, and reading.

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