5-year term life insurance policies

Ideal for covering short-term financial needs, like your kid's college or a business loan.

Last updated:

We value our editorial independence, basing our comparison results, content and reviews on objective analysis without bias. But we may receive compensation when you click links on our site. Learn more about how we make money from our partners.

Term life insurance has a long list of benefits. It’s flexible and affordable, and usually comes in 10, 20 or 30 year terms, so you can select the coverage you need — no more, no less. In some situations, providers offer a five-year policy that could be a perfect fit for your life.

It’s ideal for those with short-term, temporary financial needs, such as a mortgage or business loan, or seniors inching toward retirement. While it isn’t as popular as 10-year policies, the golden rule with life insurance is to only purchase as much as you need.

  • Compare multiple providers
  • Calculate how much coverage you need
  • Get a quote in 2 minutes

Get a FREE life insurance quote

What's Your Birthdate?
Where Do You Live?
What Is Your Gender?

More info

What is the typical cost of a 5-year term life insurance policy?

Life insurance rates vary from person to person. The premium you pay is a product of your age, health, lifestyle, occupation and family medical history, and the length of your term. Generally, the younger and healthier you are, the cheaper your rate is.

In most cases, the longer the term, the more you’ll pay. However, only a handful of life insurance companies offer a five-year term, as the cost of writing the policy often outweighs the return of investment. As a result, you may find that you can get a better deal on a 10-year policy.

With term life insurance, your premium is locked in for the life of the policy. To score the best possible rate, apply for life insurance as soon as you need it.

Protect your loved ones
Affordable 2-, 10- and 20-year term life insurance policies. Instant quotes and no medical exams.

Need help? Talk to a customer specialist


What is my risk of dying in the next 5 years?

When writing your policy, life insurance companies first consider your age and health. The reason is far from subtle: They know the older you are, the more likely they’ll have to pay out your policy.

To determine your rate, underwriters look at life expectancy data.

Let’s use a 60-year-old policyholder as an example.

According to our research, the average 60-year-old man’s risk of dying in the next five years is 6.37%. For a woman, it’s a little lower at 3.84%.

To put this into context, it helps to look at these figures next to the average life expectancy in the US. A man who hits his 65th birthday can expect to live until 84.3, while a woman is likely to live until 86.6. These are average numbers — around a quarter of 65-year-olds will reach the age of 90.

Who should buy a 5-year policy?

Ideally, your life insurance policy should cover your longest financial obligation. If you have short-term, temporary needs, a five-year term may be the right fit.

In general, this term makes the most sense for those who are reaching retirement age and those laddering life insurance policies to secure loans, supplement their income and protect their businesses.

These are the most common reasons to purchase a five-year policy.

  • To protect your income. Do you have dependents relying on your income? A five-year policy can protect your family’s financial future while you work toward increasing your income and paying off any debts you may have, like a student loan. If you die, your policy provides your family with the money they need for daily living expenses and may also cover your remaining debts and funeral expenses. When you’re in a better financial position, you can consider buying a longer policy.
  • To pay off debt. If you’ve crunched the numbers and realized you have five years left on your mortgage or loans — like credit cards or student loans — you may only need five years of coverage. Along with security, this policy makes sure your family won’t be saddled with those repayments if you die.
  • To cover your kids’ college costs. Most people purchase a policy that expires when their children have graduated college and started working and earning their own money. If your kids will enter the workforce in five years, this term may suit you. If you die, your policy will kick in to pay for their college education.
  • To plan for retirement. Five-year policies are popular among seniors in their late 50s and early 60s who are counting down the years until retirement. At this stage of your life, you’re probably in a comfortable career position and contributing more money to your savings accounts and 401(k). A term policy can protect your income and help pay for any financial needs that pop up, such as buying a second home or enrolling your adult child in graduate school.
  • To supplement your existing policy. As we age, our financial situation and obligations change — and you should adjust your life insurance policy to match. Let’s say you proactively bought a 25-year policy when you were younger. It’s 15 years later, and you now have a bigger mortgage, a business or more kids, and you realize you’re underinsured. You can ladder your life insurance by purchasing an additional policy to cover the excess.
  • To secure a loan. Are you applying for a personal or business loan? Boost your chances of approval by taking out a life insurance policy that covers the period of the loan. This reassures lenders that you have every intention of paying back the money, even if you die.
  • To protect your business. If you’re a business owner or partner, you can use a five-year term life policy for business purposes. You can buy key employee insurance, which protects your most valuable employees and offers the company a sense of security and much-needed cash flow should they die. You might also use a five-year policy to fund a buy-sell agreement, just in case one of your business partners or shareholders dies.

What happens if my policy expires?

Your coverage expires with your policy. Like most types of insurance, life insurance offers protection for the worst-case scenario — so reaching the end of your term is actually a good thing. It means you’re alive and hopefully well.

When your five-year policy expires, these are the paths you can take:

  • Renew the policy. Do the math to determine whether you still need coverage. If you still have financial responsibilities, you can opt to purchase a new policy before yours expires, if you’re under the age of 70. It doesn’t have to be a five-year policy; you can choose a longer term or explore annual renewable term insurance, which covers you for a year. Either way, you’ll have to reapply and prove you’re insurable, meaning you may need to take another medical exam. Your new premium reflects the current market rate and your age and health, so just know that it will be higher.
  • Convert the policy. Most term policies have a conversion feature. If yours does, you can upgrade to a permanent, cash-value policy, such as whole life or universal life — often without having to provide extra evidence of your insurability. Ask your provider about its requirements. Though permanent policies are more expensive, they never expire — as long as you pay your premiums. They have an investment component, which is ideal for those who want to use their life insurance for financial and estate planning.
  • Let the policy lapse. If you don’t need coverage anymore, you can cancel the policy without penalty. Usually, no action is needed on your part.

Renewing your policy? Before signing the dotted line with your current company, it’s a good idea to shop around for the best life insurance rates.

Should I choose a longer or shorter policy?

It depends on your financial situation, family and the stage you’re at in your career. Your life insurance policy should cover your longest or most expensive financial obligation, or take you up until your retirement. If you die prematurely, your policy covers your debts and give your family the money they need to live.

You may not know where you’ll be 10, 15 or 20 years from now, but it’s easier to gauge your financial needs five years into the future. That’s why many policyholders ladder their life insurance and use a five-year policy to cover their short-term needs.

One case where you might need a shorter policy

You might want to take out an annual renewable term policy if you need life insurance as part of a divorce decree or if you’re temporarily doing a dangerous job, such as mining. The policy can remain in force for as long as you’re dealing with a higher risk of death.

One case where you might need a longer policy

If you have a 10-year mortgage, you should purchase a decade’s worth of coverage. Unfortunately, your debt doesn’t die with you, so your family will be responsible for those repayments should you pass.

Companies that offer term life insurance

Name Product Issue Ages Coverage Range Medical Exam Required State Availability
18 - 85 years old
$10,000 to $10,000,000+
Depends on provider and policy
All 50 states
Compare affordable quotes from 12+ A-rated life insurance companies side-by-side.
21 - 54 years old
$50,000 to $1,000,000
Not available in Alaska or New York
Affordable 2-, 10- and 20-year term life insurance policies. Instant quotes and no medical exams.
20 to 60 years old
$100,000 to $8,000,000
Not available in New York
Term life insurance with no policy fees and the freedom to cancel anytime. Simple application process that can get you approved for coverage instantly.
18 - 64 years old
$100,000 to $3,000,000
All 50 states
Customized term life insurance policies up to $3 million, no medical exam for certain applicants.
25 - 60 years old
$100,000 to $5,000,000
Available in all states except for Montana
Offers term life insurance with accelerated underwriting. No-exam coverage up to $1,000,000 for those who qualify.

Compare up to 4 providers

Bottom line

If you have people relying on your income, you may want to look into life insurance — and a term policy is a flexible and affordable way to protect your family. While five-year policies aren’t readily available, they do make sense for those who have short-term financial obligations. They’re also popular among seniors edging closer to retirement and business owners who are trying to secure loans and key employee insurance.

Check out our guide to life insurance to compare providers and find the policy that best meets your needs.

Find a life insurance policy today

Use our magical comparison tool to find the best rates in your area.

Your information is secure.

Frequently asked questions

Was this content helpful to you? No  Yes

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site