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Ideally, your life insurance policy should last as long as your longest financial obligation. If you’ve done the math and realized you have just 10 years’ worth of financial obligations on your plate — like a mortgage or business loan — consider a 10-year policy. It’s also a popular option for people who are counting down the years until they retire.
Your premiums are locked in for the life of the policy, so aim to take out a policy as soon as you need it to get the best possible rate. Your rate is determined by a range of factors such as your age, health, lifestyle, occupation and medical history.
To calculate the typical cost of a 10-year policy, let’s look at $250,000 of coverage.
According to our research, a 30-year-old nonsmoking man living in Los Angeles, California can expect to pay between $9.46 and $31.94 a month, or $8.60 and $24.50 a month for a woman. The rates for a smoker are higher, typically from $29.02 to $57.71 a month for a man and $23.65 and $46.03 a month for a woman.
|25||$13.76 – $53.38||$12.04 – $36.75|
|30||$13.76 – $53.81||$12.04 – $41.13|
|35||$13.76 – $57.75||$12.47 – $43.31|
|40||$17.20 – $67.81||$15.48 – $49.88|
|45||$25.80 – $91.88||$22.79 – $72.19|
|50||$38.27 – $118.56||$32.68 – $105.88|
|55||$63.41 – $164.16||$48.16 – $124.96|
|60||$101.91 – $241.96||$69.66 – $177.96|
|65||$174.56 – $395.71||$113.52 – $275.21|
|70||$285.60 – $781.56||$180.00 – $524.71|
Your life insurance policy should cover your longest financial obligation. So in short, a 10-year policy is suitable for anyone who has just a decade left of financial responsibility. It makes sense to purchase a 10-year policy in these situations:
It depends on your financial situation and where you are in your career. Ideally, your life insurance policy should cover your longest and most expensive financial obligation, or take you up until your retirement. That way, if you die before, your family won’t be responsible for your debts, and your policy will provide the income they need to live. You might consider a different term length if:
When your policy expires, so does your coverage. At this stage, there are a few options to choose from:
Age is a life insurance carrier’s number one consideration. The reason for this isn’t a secret: The older you are, the more likely it’ll have to pay out your policy. In determining your rate, underwriters look at life expectancy data.
Let’s continue with our example of a 50-year-old policyholder. For the typical 50-year-old man, the risk of dying in the next 10 years is 7.35%. For the average woman, it’s 4.57%.
To put this into context, a man who turns 65 today can expect to live until 84.3, while a woman is likely to live until 86.6. Keep in mind these are average numbers — around a quarter of 65-year-olds will reach their 90th birthday.
Typically, people purchase a 10-year policy with a specific purpose in mind, whether that’s to cover their mortgage and debts, secure a loan or plan for retirement. It’s great for short-term financial obligations and is budget-friendly enough to fit into most families’ financial planning.
Before signing off on a provider or policy, check out our guide to life insurance.
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