How Does A 15-Year Term Life Policy Work?
A 15-year term life insurance policy will last precisely 15 years. If you die during that time, the insurance company will pay out the full death benefit. Your beneficiaries could use that money for any purpose with zero restrictions of any kind.
Nearly all 15-year policies will have a fixed premium for the entire duration. However, you may find a few insurers that offer such a policy where the price increases at some point during the 15 years.
Generally, a 15-year term is available only to those who are 70 years old or younger.
What Happens After 15 Years?
If you let a term life insurance policy age out, the coverage simply ends. The insurance company retains the money you’ve paid, and you’d no longer be insured.
The only exception to this rule is if you have a policy with a “return of premium” rider. In that case, the insurer would indeed refund you all the premiums you paid over the past 15 years. However, those riders are very rare, and it would make the policy cost nearly 3-5 times more.
Options Before And After The Policy Ends
Before the policy ends, you typically have two options.
First, the company may allow you to renew the policy. If so, and you agree to the renewal, the policy is reissued at a much higher price. You won’t need to go through any sort of qualification process.
The second option would be to convert the policy from term life to whole life. This option also does not require you to endure a qualification process. If you exercise the conversion privilege, expect a massive increase in the cost.
That’s because you’re A) going from term to whole life, which always costs 2-10 times more than term, and B) the rate is calculated based on your current age, and you’re older now, so that translates to a higher price.
If you don’t renew or convert the policy, it will officially terminate. To continue having life insurance, you will need to buy an entirely new policy from the same or a different insurer.
How Much Does A 15-Year Term Life Policy Cost?
The cost of a 15-year term life policy will be based on your age, gender, health history, tobacco habits (if any), death benefit amount, and whether or not you take a medical exam. Below are some sample term prices for various ages and coverage amounts.
Who Should Buy A 15-Year Term Life Policy?
A 15-year term life policy is a good option if any of the following apply:
- Income replacement: If you have a spouse or other children who depend on you as a primary breadwinner, you need a term life policy. If you die, they won’t be able to live. If your children are at least 3-5 years old, then a 15-year term life policy is a great and affordable way to ensure your income will be replaced in the event you die while they are minors.
- Coverage for college-age children: If you’re supporting your kids while they are in college, they rely on your income for their way of life. A term life policy ensures that if you die, they can continue their studies.
- Paying off a mortgage: A 15-year term is a great way to ensure your mortgage is covered, assuming you have 15 years or fewer of payments left.
- Low budget: Term life insurance is the cheapest type of life insurance. If your budget is very limited at the moment, 15-year policies can cost pennies per day.
Qualifying For A 15 Year Term Policy
You can qualify for a 15-year term life policy by either taking a medical exam or not. If you take a medical exam, the insurer will also order all your medical records. From start to finish, the entire process will take roughly 4-6 weeks before your application is approved. The main advantage of taking a medical exam is that it can lead to lower prices.
Like instant life insurance options, if you don’t take a medical exam, you’ll only have to answer health questions. Your application will either be approved within minutes or in a few business days. Cost-wise, it will cost more than options with an exam, but not by much.
Frequently Asked Questions
The primary reason why whole life insurance costs more than term life is that whole life is guaranteed to last forever. That means the insurer knows they will one day have to pay out a death claim. On the flip side, insurance companies know that 99% of term life policyholders will not die while the policy is in force, which is why it costs so much less. Another reason whole life insurance costs more is that it builds cash value, whereas term life insurance does not.
Term life policies will never build cash value.
AARP term life policies are a good option only when you need a small amount of coverage. In most cases, insurers typically require you to buy at least $25,000 or $50,000 for most term policies. AARP, however, will go as low as $10,000. So if you only need a very small amount of term life insurance, then yes, AARP is a good solution. However, if you need more than $25,000 of term life insurance, then AARP would be a bad option. That’s because A) AARP’s term life insurance has a price increase every 5 years, and B) you can get more coverage at a cheaper cost from many other insurers.
All types of life insurance will pay out cash when you die. The money can be used for any purpose whatsoever. So, yes, a term life policy payout can be used for funeral costs. However, it’s generally not wise to plan to rely on a term life policy to cover your final expenses because statistically, it’s improbable that you will die while the policy is in force. If the policy ends before you do, then you don’t have it to pay for your final expenses, which is the very issue you were trying to solve. Instead, you should opt for a permanent whole life final expense policy, so that you can rest easy knowing it is guaranteed to last your entire life.
Yes, a 10-year term life policy will cost about 20-40% less than a 15-year term. With term life insurance, the shorter the term length, the lower the price.
- Nationally licensed life insurance agent with over 16 years of experience.
- Personal annual production that puts him in the top .001% out of all life insurance agents in the nation.
Anthony Martin is a nationally licensed insurance expert with over 16 years of experience and has personally served over 10,000 clients with their life insurance needs. He frequently authors entrepreneurial and life insurance content for Forbes, Inc.com, Newsweek, Kiplinger, and Entreprenuer.com. Anthony has been consulted as an expert life insurance source for dozens of high-profile websites such as Forbes, Bankrate, Reuters, Fox Business, CNBC, Investopedia, Insurance.com, Yahoo Finance, and many more.
- 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.
- 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.
