How Does A 10-Year Term Life Policy Work?
A 10-year term life policy is temporary life insurance coverage that will expire after 10 years. If you die during those 10 years, the insurer will pay out the full death benefit for any natural or accidental death. Your beneficiaries can use the money for any purpose, such as funeral costs or outstanding debts, and they keep any remaining funds.
Most 10-year term policies have a fixed premium for the entire term. However, some companies may increase the premium at some point (it’s very rare).
Normally, a 10-year term is available only to people who are 80 years old or younger.
What Will Happen After 10 Years?
Whenever a term life policy ends (in this case, after 10 years), the insurance protection terminates, and the insurer keeps all the premiums you paid.
Now, some term policies have a “return of premium rider” that refunds all your money if you reach the end of the term. However, these riders are rare, cost significantly more, and you must opt for it when you initially apply. A return-of-premium rider cannot be added after the policy has been in force for more than 30 days.
What Options Are There Before And After The 10 Years Are Up?
If you want to continue having life insurance, there are a few options. Being proactive is key.
- Renew the policy: Many term life policies will allow you to renew the coverage at the end of the term. The insurer doesn’t require you to requalify. If you agree to the renewal, they reissue the policy at a greatly increased price.
- Convert to whole life insurance: Nearly every term life policy will contain a “conversion privilege” that allows you to convert the policy from term to whole life. The conversion process is guaranteed, so you don’t need to answer health questions or take a medical exam. There will be a significant increase in premiums for two reasons. First, you’re going from term to whole life. Whole life insurance is always much more expensive than term life. Second, the price will be based on your age at the time you execute the conversion. When you bought the term policy, you were much younger, whereas now you’re older.
- Buy a new policy: If you don’t convert or renew (if that was an option), you’ll need to buy a new policy to continue having life insurance. That may or may not be possible depending on your age. All types of life insurance have
How Much Does A 10 Year Term Life Policy Cost?
Many factors, including your age, gender, health history, policy type, coverage amount, and lifestyle, determine the cost of life insurance. That said, below are some sample 10-year term life rates.
When Is It A Good Idea To Opt For A 10-Year Term?
A 10-year term life policy would be ideal for people in the following circumstances:
- Parents with dependent children: If you have minor children who rely on your income to live, then a 10-year term is a great way to ensure your income is replaced if you were to die. Keep in mind that if your children are under 10, you may want to consider a 15- or 20-year term to ensure you have coverage until they become self-sustaining adults.
- Short-term financial debts: If you have a car note, personal loan, remaining mortgage balance, credit cards, or any other non-long-term debt, then a 10-year term would be the ideal solution to pay off those debts if you died.
- Your budget is currently minimal: 10-year term policies are very inexpensive, which can be useful if you cannot allocate much money for life insurance. For example, a 50-year-old female can get a $250,000 term life policy for as low as $24 monthly.
- About to retire seniors: If you’re on the verge of retirement and still have a mortgage balance, a 10-year term is the perfect solution. It can also be beneficial if you still have any dependents, such as a spouse, who rely on your income to maintain their standard of living. Lastly, while you should seek final expense life insurance to cover your end-of-life costs, the proceeds from a 10-year term policy could help pay for them.
How To Qualify And Buy A 10-Year Term
To qualify for a 10-year term, you have two options: simplified issue or fully underwritten. There are no guaranteed acceptance term life policies.
Simplified underwriting does not require you to complete a medical exam. In most cases, the insurer won’t request your formal medical records. You typically only need to answer some health and lifestyle questions. Often, simplified applications can result in approval within a few business days.
On the flip side, a fully underwritten policy requires you to complete a medical exam, and the insurer will order all your medical records. Approvals will generally take 4-8 weeks. The main advantage of a fully underwritten application is the lower cost. Because the insurer knows everything about your health, it assumes less risk, and thus the price is lower.
Some companies offer online applications where you can apply directly on their website without speaking with an agent. However, most insurers require that you meet with one of their licensed agents (either in person or virtually). The agent you work with will gather all your information and ask you the required health questions.
Regardless of how you apply, you’ll receive a paper policy by mail if your application is approved.
Frequently Asked Questions
Term life policies never accumulate cash value. Only whole life and universal life policies accrue cash value.
While uncommon, there are indeed term life policies that last fewer than 10 years. Some companies offer 5-year terms, and believe it or not, there are 1-year term policies.
Yes, the longer the term length, the higher the price. A 30-year term will always cost more than a 20, 15, or 10-year term.
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- Nationally licensed life insurance agent with over 15 years of experience
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- Nationally licensed life insurance agent with over 20 years of experience
- Best selling Amazon author.
Jeff Root is a nationally licensed life insurance expert with over 20 years of experience. He has personally helped over 3000 clients with their life insurance needs. Jeff is a best-selling Amazon author and the managing partner of a highly successful insurance brokerage that manages over 2,500 licensed insurance agents across the USA. He has been a featured life insurance source for prestigious websites such as Forbes, Bloomberg, MarketWatch, Nerdwallet, and many more.
- Nationally licensed life insurance agent with over 15 years of experience
- Best selling Amazon author of five insurance sales books.
David Duford is a nationally licensed insurance expert with over 15 years of experience. He has personally helped more than 15,000 clients buy life insurance. David has been featured as an expert source for highly authoritative publications such as A.M. Best and Insurancenewsnet. He also runs one of the largest Youtube channels to help aspiring insurance agents serve their clients better.
