How Does A 20-Year Term Life Policy Work?
With a 20-year term life insurance policy, as the name implies, coverage will last precisely 20 years. At any point during that time, the insurer will pay out 100% of the death benefit. Your beneficiaries have the right to spend the money on anything.
It’s very common for 20-year policies to have a locked-in premium for the entire term. It’s rare, but some insurers may have a price increase during those 20 years.
Lastly, you generally must be 65 years old or younger to have access to 20-year terms.
What Happens After The 20 Years?
After 20 years, the coverage will terminate, and you will no longer be insured. In addition, the insurer will retain the premiums you’ve paid (unless you have a return of premium RiderReturn of Premium Rider
A rider that will refund all premiums paid at the end of the policy term. It's uncommon for insurers to offer these riders, and they will significantly increase the policy's cost.).
What Options Are There After 20 Years?
Instead of just letting the policy expire after 10 years, you typically have options to continue having coverage.
- Convert the policy to whole life: The overwhelming majority of term life policies have a conversion privilege. This option allows you to convert from a term to a whole life policy. The conversion is guaranteed, so your current and past health will not prevent you from making this change. Be mindful of the premium change because it will be substantial. When comparing term vs whole life, the cost is one of the most significant differences. A whole life policy will always cost 2-10 times as much as a term life policy.
- Renew: Many term policies allow you to renew coverage before it officially terminates. If you agree to the renewal, the policy is simply reissued at a new (much higher) price. There is no qualification to renew. It’s either yes, you agree to the higher price, or no, you don’t, in which case the policy would end.
- Buy a new policy: Whether you do it while the policy is still active or after it officially ends, you can buy an entirely new life insurance policy. Just be mindful of your age because the age limit for life insurance products is an essential factor to consider.
How Much Does A 20-Year Term Life Policy Cost?
20-year term policies will cost more than 15-year or 10-year terms. Beyond that, your exact price will be a function of your exact age, state of residence, gender, health history, coverage amount, and whether or not you complete a medical exam. Below are some sample 20-year term life quotes.
When Is Buying A 20-Year Term A Good Idea?
Remember that all life insurance policies pay out cash (tax-free), which can be used for any purpose. That said, a 20-year term is ideal for those who:
- Need coverage to replace income for a spouse and dependents.
- Would like to pay off a mortgage or other debts.
- Have children in college who still depend on you financially.
- Need budget-friendly coverage. Term life insurance (regardless of the length) is very affordable. Depending on various factors, you can get a healthy amount of coverage for a few cups of coffee.
How To Qualify & Buy
To buy a 20-year term policy, some insurers allow you to sign up directly on their website without speaking with an agent. However, the majority (over 90%) of providers require you to work with a licensed agent who will ask you various health and lifestyle questions and gather all your information.
Many 20-year policies can be bought without taking a medical exam. You would only need to answer health questions. If there is no exam, you’ll typically get an approval within a few business days (sometimes it’s instant). However, if you opt for a policy that requires a medical exam, the process will usually take 4-6 weeks before you know if you’re approved.
That’s because, in addition to you completing the exam, the insurer will order your medical records from every physician you’ve seen in the last 10 years. The primary advantage of taking a medical exam is that it can lead to lower premiums.
- 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.
