How Does A 25-Year Term Life Policy Work?
A 25-year term life policy will protect you for exactly 25 years before it ends. If you die at any point during that time, the insurance company will surely pay out the full death benefit to your beneficiaries. They will be free to spend that money on funeral expenses, bills, or anything else (there are no restrictions).
It’s extremely common for 25-year term plans to have a locked-in premium for the entire duration. However, you may find an insurer that offers such a plan with gradual rate increases over the years. While it’s not a hard-and-fast rule, you generally need to be 60 years old or younger to buy a 25-year term.
What Will Happen After The 25 Years Are Up?
After 25 years, the coverage will terminate, and you will no longer have life insurance protection. Furthermore, all the money you’ve paid will not be refunded to you. The insurer keeps all premiums.
The only time you will get your money back is if you had a term policy with a “return of premium rider”. Such a rider would cause the insurance company to refund 100% of the money you paid over the 25 years. Keep in mind that a return of premium rider can only be bought when you initially apply. It cannot be added on after that policy is more than a month old.
It will also make the policy much more expensive compared to a term policy without this rider.
What Can You Do Before The 25 Years Are Over?
You don’t have to just let the policy expire after 25 years. You usually have the following options if you still wish to have life insurance coverage:
- Covert to permanent coverage: Nearly every term life policy will come with a “conversion privilege” that gives you the guaranteed right to convert from term life to whole life insurance. When you convert, you’ll see a significant price increase because whole life costs 2-10 times as much as term life.
- Renew at a higher price: Many insurers offer the option to renew coverage after the initial period ends (in this case, 25 years). If you’re on board with the renewal, the insurer reissues a new policy at a higher price point, which will be much more expensive than what you were paying.
- Buy a new policy: Whether it’s before or after the 25-year term policy ends, you can buy a new one from the same company or another provider.
How Much Does A 25 Year Term Life Insurance Policy Cost?
Life insurance rates are based on many factors, including your health, gender, age, state of residence, tobacco or nicotine use, and the amount of coverage. Below are sample 25-year term life rates, but note that your price may differ based on the variables mentioned.
Who Is A 25 Year Term Good For?
A 25-year term life insurance policy is an excellent option for anyone who needs to cover a prolonged temporary issue, such as:
- You’re the primary breadwinner of your household, and your spouse or your children depend on you.
- Kids in college who rely on your financial support.
- Want permanent life insurance, but can’t afford it at the moment.
- Would like to pay off a mortgage or other financial debts.
- 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.
