20-Year term life insurance plans are one of the most popular policies issued by major carriers. These types of plans provide stable and affordable protection and effectively replace lost income. Most companies guarantee that the premium will remain level for 20 years and the death benefit will not reduce during that time.
Coverage is ideal for individuals, families or businesses that wish to provide a large amount of death benefit at a reasonably low cost. If you have special-needs children, it can help create an immediate estate upon your death. If prices drop after you have purchased coverage, you can easily re-apply for the lower rate, without jeopardizing your existing plan.
You are not obligated to keep the policy for any length of time. Coverage can be easily terminated and you do not have to pay forthe years that are not utilized.
What Happens At The End Of 20 Years?
The proceeds are guaranteed and not subject to federal income taxes. If you are still living at the end of the period, your policy ends, although you may still have a guaranteed maximum premium that you can accept for continuing an additional policy. This "guaranteed"price is typically quite high.
However, if you are still healthy, you may apply for a new policy for any face amount or term limit (subject to company restrictions). Your new rate will be based on your current age and health. Even if you now are treated for specific conditions (high blood pressure, acid reflux etc...), it may not have a significant impact on the price you pay.
Of course, you can apply for a different face amount of coverage. Reducing the amount will help lower the premium. As you get older, the length of time you need coverage may reduce, along with the amount of benefits that are required to provide living income.
NOTE: Typically, you can not buy a 20-year guaranteed premium if you are older than age 70. At that age, only selected carriers will offer a policy. Transamerica is one of the biggest and most reputable companies that presently will underwrite the risk.
The monthly prices shown below are based on a preferred non-smoking risk. Existing medical conditions and nicotine use are likely to increase rates. We illustrated the three cheapest options.
$500,000 For 30 Year-Old Male
$20.76 - Ohio National
$21.10 - Protective Life
$21.35 - American General
$500,000 For 30 Year-Old Female
$17.92 - Royal Neighbors of America
$18.07 - Transamerica
$18.73 - American General
$500,000 For 40 Year-Old Male
$29.91 - Ohio National
$29.45 - Protective Life
$31.06 - Genworth
$500,000 For 40 Year-Old Female
$25.52 - Ohio National
$26.16 - Protective Life
$26.96 - Savings Bank Of Ma.
Choosing The Correct Guarantee Period
A common mistake is buying a less expensive 10-year term life policy with the intention of purchasing an additional 10-year contract in 10 years. Initially, your premium payments will be lower. However, by waiting 10 years to purchase coverage, if your health changes, premiums for the second 10-year term life policy could substantially increase, or you could possibly become uninsurable.
Conversely, if you only need coverage for 10-15 years, don't sign up for a 20-year policy. Assuming your initial instincts were correct, you'll have overpaid premiums by hundreds or thousands of dollars, with no way of getting the money back.
Impact Of Health Conditions
Although common conditions such as high blood pressure or high cholesterol won’t always substantially increase the rate, certain conditions, such as diabetes (Insulin dependent) or coronary heart disease could easily double the premium. And of course, recent cancer and heart issues may cause companies to decline any new application. Although "high-risk" options may be available, premiums will be very high.
When you purchase a (guaranteed) 20-year term life policy, any change in your health during those years will have no affect on the rate. Whether you gain weight, start taking new medications or have multiple surgeries, your premium will not increase.
Also, if you decide you no longer need coverage, you may cancel the policy at any time. You are never required to keep the policy any longer than you want.It does not matter whether you keep the contract two months, two years or two decades.
Optional riders are available with most plans. Some of the most common riders include:
* Waiver Of Premium If the primary insured becomes totally disabled, premium payments are waived and paid by the company that issued the contract. Since the cost of the policy is not high, the cost of the rider will not be significant.
* Accidental Death Benefit If the insured dies as a direct result of a covered accident, an extra death benefit is paid in addition to the original face amount. The extra payout does not cause any increase in taxes.
* Living Benefits If the insured is diagnosed with a terminal illness (life expectancy of less than one year), a portion of the death benefit may become available as an immediate cash benefit. The amount varies, depending on which company wrote the contract.
Each company will have different guidelines and availability on their term life insurance plans. In addition to 20-year level plans, most major life insurance companies offer 10-year level policies and 15-year level policies. All three options are excellent low-cost options.
Although not as popular, 5-year, 25-year and 30-year contracts are offered.The 5-year plan is often used in conjunction with a corporate loan of less than 60 months. The longer-guarantee contracts are typically purchased to avoid the risk of a serious medical issue that may occur within 20 years.
Three additional contracts allow you to cover the applicant "to" ages 65,70 and 75. Thus, if you were 58 years old, you could effectively purchase contracts for 7, 12 and 17 years, instead of the conventional 10, 15, 20 etc... For more information on the different types of coverage, we wrote an article that will provide specifics.
No Medical Exam Options
The "no medical exam" concept policy allows you to avoid seeing a doctor or providing blood and/or urine for testing. Although some healthy applicants may prefer this type of plan (because of time constraints or preferring not to give blood), most persons have a specific medical condition.
Thus, as you might expect, prices will be higher for this type of coverage. Therefore, we do not recommend purchasing a "no medical exam" policy unless you are willing to pay a much larger premium. Also, if you are uninsurable or have been previously denied, it may be advisable to consider this type of policy.
How much higher? We listed a few examples below. We also assumed a healthy nonsmoking 40 year-old male wanting $250,000 of term coverage. Rates shown are monthly:
Regular Term Policy
$18.29 - American General 20-year guarantee
$18.38 - Genworth 20-year guarantee
$18.81 - Ohio National 20-year guarantee
No Medical Exam Policy
$57 - 10-year guarantee
$70 - 15-year guarantee
$78 - 20-year guarantee
Obviously, the underwritten plans (regular policies above) are much cheaper, since they require additional medical questions and documentation. However, if you are reasonably healthy, in most situations, even if you take medications, the underwritten contracts will cost less.
Our quotes are free (see quote box at the top of the page) and we constantly update any company change in price or coverage. If coverage is needed quickly, expedited underwriting and approval is offered. Cheap 20-Year term insurance rates are available and we'll help you find them.
February 20 2015 - John Hancock is now offering a 20-year term product. The minimum face amount is $250,000 and because of their extensive permanent product portfolio, several attractive conversion options will be available if long-term benefits are suddenly needed.
"UCheck" is also a new tool that has been created for brokers and websites like ours. It provides a more accurate risk assessment of an applicant's classification, and thus, will provide more accurate quotes.