A term life policy is often the answer for those looking for life insurance in its purest form. Term policies have the core features of life insurance without certain add-ons that can make other policies more expensive and nuanced. In general, 20-year term life insurance costs are typically lower than permanent insurance plans.
Term life policies are an excellent introduction to life insurance basics. As term life policies only stay in force for a preset duration of time, 20-year term policies are preset for 20 years. As long as the premiums are paid, the policy will pay out the coverage amount to the listed beneficiaries if the policyholder passes away during the policy term.
One of the reasons term life policies tend to be cheaper than permanent life insurance policies is the limitation of time. Term life policies often have fixed, or level, premiums, meaning that the rate set in the beginning stays the same throughout the policy's life.
Understanding how these policies work is key to determining if they're right for you.
What happens after 20-year term life insurance expires?
When a term policy reaches the end of its term, it goes out of force. That means that a policyholder can outlive their term life policy. In this situation, after the term of the policy ends, there's no payout to beneficiaries. However, it can possible to renew your term policy, although the rate will likely be higher because you are older, and thus at higher risk.
Can you cash in a 20-year term life insurance policy?
Since they generally don't have a cash value component, term life insurance policies can't be cashed in. Permanent life insurance policies, like whole life, do usually have a cash value feature, which can be cashed in.
The absence of this feature in term plans is one of the reasons that these policies tend to have lower premiums than permanent life policies.
People use life insurance for different reasons, but they tend to share an element of financial security. Below are some of the objectives and life situations that can be a good fit for a 20-year term life policy.
Consider these situations and strategies to help you determine if a 20-year term life insurance policy is worthwhile for you:
If your children are young, a 20-year or longer-term policy can help ensure that they don't run into financial insecurity, even if you were to pass away unexpectedly. The policy payout is often used as a form of income replacement in the event of the primary income earner's loss.
Term policies often have the most competitive rates amongst different types of life insurance. Depending on the insurer, you could use a 20-year life insurance policy to pursue relatively low-cost fixed rates.
Mortgages are one of the most significant expenses that families take on. When you have around 20 years left on your mortgage, taking out a term policy for the same duration can help ensure that the mortgage gets paid off even if the worst were to happen.
Life insurance policies are often incorporated into retirement strategies. Suppose you have roughly 20 years left before retirement. In that case, a term policy of that length can help ensure that your family or estate remains financially solvent if you were to pass away before that time.
Ethos offers a fast, easy way to apply for term life insurance online. Applicants can avoid medical exams simply by answering a few health questions. In many cases, applicants can experience same-day coverage, thanks to Ethos' expedited online process.
Even though the process is streamlined, there's still room to customize and select the best coverage to fit your needs. Consider our term life policies and find the financial protection that's right for you. Get a quote today for the coverage you want.