The Best 20 Year Term Life Insurance Policies and the Pitfalls To Avoid

term of life insurance
Are you thinking about Term Life Insurance? Find the answer you need here today.

20 Year Term Life Insurance….  Pretty hot stuff. 

Inexpensive financial protection to have. 

Yes, it fills a big gap for many different American’s life insurance needs.  Is it the answer to everyone’s prayers?  Probably not, but it has a respectable place in the portfolio of many families raising kids that is for sure.

While 20 Year Term is a popular product, it is sometimes purposed for needs that it does not suit so well.  Term life insurance is often sold because it is “cheap” and is easy to market or “sell.”

As a life insurance consumer, just make sure you are not comprising your needs for appropriate coverage over price.  A change in health later in life and you have a big problem.  Worse yet, what if you planned on using it for end of life expenses and the policy expired do to the limitations of age?

So in this post, I will tip you off when 20 year term life insurance might be the answer.  You will get the real scoop on this popular life insurance product.  Included are:

  • The upsides and downsides of 20 year term life insurance
  • Common mistakes made by many consumers that you should avoid
  • How to get the lowest possible cost for life insurance coverage

As you shop for term life insurance, be sure to carefully consider all the information about the different types of term life insurance. This is the only way to make darn sure that your purchase will get the job done right and protect your loved ones from financial devastation.

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What Term of Life of Insurance Do I Need…The Different Term Lengths

As a shopper for life insurance, you may have already read about the different term life insurance products.  Specifically, how term life insurance is typically sold in 5 year, 10 year and the most common 20 and 30 year lengths. 

Have you asked yourself the question… what term of life insurance should I buy?

Sometimes it isn’t quite as simple as purchasing a 30 year term life insurance policy to cover a 30 year mortgage and various other debts.  If you have a family complete with kids for example, there is more to consider. What would happen if support was cut off from Mom or Dad due to the unthinkable?

Both parents, regardless of “income” should be covered. That is a major misconception.

Are your kids going to college?  If so, how far in the future is that?  What is your debt like?  When will it be paid off?  Where is your career and/or your spouse’s headed?

Will you need as much life insurance in 30 years as you do now?  Keep in mind that the mortgage amount will be declining during those years for most people while many also expect their income to increase.

Factoring in items like this helps paint a clear picture of how long you will need life insurance as well as the appropriate amount of coverage.  Sometimes you are better to blend multiple life insurance policies to cover these risks.  Maybe you have a 30 mortgage with 19 years remaining but your kids may complete college inside 10 years.  A 20 year term of life insurance to cover the remaining mortgage and additional 10 year term life policy will cover those costs, protect your spouse and kids from financial damage.  It also keeps you from overpaying for life insurance by simply buying a larger, 20 year policy combined with a smaller term policy that will fall off. 

Of course, this example scenario assumes that your finances are in good order and do not have a lot of outstanding debt beyond the mortgage.  Additional debt such as loans or credit cards could be another factor to figure into your term coverage.

The term of life insurance you need is based on your individual situation.  A blended approach like the fictitious example above often fits the bill.  This will also save you money versus buying one larger, longer term life policy which may be unnecessary.

A key point to remember about these products is the difference in premiums as well as the specific benefits included in the actual policy.  It does vary. Term life insurance cost varies by numerous factors.

Life insurance can be very personal in how it is used.  To avoid any confusion though, let’s continue with a term length of 20 years.

What Makes Guaranteed Level 20 Year Term Life Insurance Tick?

First of all, any kind of term life insurance is temporary.  It “terminates” after a defined period of time in the policy.  It has no cash value build up inside of it.  There is no financial gain unless death of the insured were to happen.

Guaranteed level 20 year term life insurance will hold the same premium and death benefit amount for exactly 20 years. There is no change in cost or benefits during that time as long as you are paying your premiums.

So, 20 year term is temporary and “pure” life insurance for 20 years.  Upon the completion of that period, the coverage expires and the individual will no longer have coverage at the premium cost from 20 years ago.  The term is over.  You have “rented” financial protection during that time for an agreed upon price.

Obtaining the best 20 year term life insurance for you is going to depend upon a few important factors. Some are going to be in your control such as your occupation, driving habits, weight and lifestyle. Others are not. Items such as a medical history. 

20 year term life insurance is a good place to start as you are establishing yourself, even as an individual.  As you age you can adjust your coverage to make sure your family or business interests are financially protected from being upset due to the unexpected.

Understand that there is rarely a better time than the present to get coverage in force. It isn’t something you ponder over for months and years.  Life insurance does not go down in price as you age, period.  A change in health will dramatically effect the cost you will pay for coverage.

Health can change and accidents occur regardless of being youthful.  Your age and health are your biggest assets in obtaining the lowest cost term life insurance, period. Take advantage of it. 

Attempting to save money for another year or two and buying down the road will just raise your monthly premium while risking a negative event in your life such as a medical diagnosis of a health condition.

Surprises life can dish out.

Folks, I am going to make a strong statement here…

Having life insurance is really a responsibility if you have dependents, a spouse or debts to payoff if you do not have sufficient financial resources to cover them all in your absence!!

If your family has no debt or has very deep pockets and can afford the loss of an adult breadwinner, caregiver/homemaker, that might be a different story. 

Economic reports of the average savings across the US versus the debts that are owed clearly illustrate the need for term life insurance to protect our love ones from the financial crater we may leave them with.

The vast majority of us have plenty things we waste money on.  I believe my family spends way too much money dining out for example.  I’m a good cook by the way!!  Cutting out just one evening a month out would pay for my term life insurance.  Keep in mind, I took it out when I was quite a bit younger.

Term life insurance is very affordable, even if you have a health condition.  We just need to make a small monthly sacrifice to protect our families first.  I know plenty of people that drop money on Starbucks… like it grows on trees!!

Personally, I carry two 20 year term life policies to protect my family.  They are staggered between 2 different life insurance companies.  That is what has suited my concerns and needs the best.  I do practice what I preach.

It is a terrible thing when someone unexpectedly passes on but it is even worse when a grieving family is left behind without life insurance to struggle trying to get by.

Sadly, it happens regularly.

Hopes and dreams are ruined because of car wrecks and cancer all the time.  Does not matter how old you are right?  Plenty of death due to cancer even in the 30’s and 40’s.  Just had a good friend, age 50 with a younger wife in her early forties, die of breast cancer.  He is left with 4 kids with the youngest being age 6.

Make sure your family can carry on with life financially.  Term life insurance is often the answer.

Sorry for the rant by the way…

I am a firm believer in doing the right thing for your loved ones. Too many stories to tell.

Now, let’s talk about the difference in premiums among the different term periods commonly available.

As mentioned earlier, term life insurance is just temporary coverage. 

In our case of 20 year protection, you do have the protection of life insurance with a 20 year term and a guaranteed level death benefit and premium during that period until it expires or “terminates.” Keep in mind, this is for a guaranteed level policy only. 

Again, “guaranteed level.”  There are many policies issued that are forms of term life insurance, but the rates go up over time.  Globe Life is famous for that.    Very cheap initially and becomes expensive to own long term.

So, a 30 year level term policy with guaranteed level premiums would lock you in at a premium rate for 30 years…

What Happens at the End of Each Term?

At the end of a 20 year term policy, the guaranteed level premium will “terminate” (expire).  Your premiums will jump drastically and continue to go up sharply each year (annually) after that.  With the premiums being very high outside of the “term”, most people will drop them because they feel as though they are being overcharged.

You must understand that after a certain number of years, you are a larger risk to insure, especially if 20 or 30 years have gone by.  Your best health is realistically behind you.

At this point, you may have an option to change your coverage to permanent life insurance.

Whole Life Insurance has been the traditional mainstay for years, but I would like to point out another option.

That option would be Guaranteed Universal Life Insurance.  This is a permanent form of life insurance that is much more affordable and can cover you to age 121 more affordably than whole life insurance. Term like rates in fact.

With that said, it is very important that you know what options to convert are built into any term life insurance product.  Whether it is 10, 20 or 30 year term life insurance…  Do not put your John Hancock on the “X” until you know your options contained in the term life policy.  In other words, have an understanding of the “fine print.”

Myself…I would not buy any term life insurance policy from any life insurer with limited provisions for conversion.  Does not matter if it is a bit cheaper up front.  20 year term life insurance is low cost to start with and much cheaper long term to have good options to convert.

If you don’t want to take my free advice here and years down the road need or want to convert, the only option may be the more expensive whole life insurance.  At that point, you may be thinking “wow, I can’t afford that or I don’t want to afford that.”  Now your shopping for a new term life insurance policy.  Your also much older and your health has changed due to the effects of aging.  You might not be able to even qualify for something affordable at that point.

That is why it is critical to know what you are buying.

I have been around the block more than once and have seen the health of many of my policyholders change drastically.  Working with a lot of seniors in what I do, I also hear lots of stories of how life changed over the years.

In my experience, there is no substitute for having your ducks in a row.  Flying by the seat of your pants usually results in a huge layout of cash or no affordable life insurance at all.

If you are curious about universal life (UL) insurance give us a call for a quote.  Please note. We typically only recommend guaranteed universal life insurance.  Standard UL can implode prematurely if it is not carefully monitored.  It is a more complex product. 

Guaranteed universal life insurance (GUL) offers guaranteed level premiums, level death benefits and will not implode unless you do not pay your full premiums. 

It offers a “no-lapse” guarantee, hence guaranteed UL.  Coverage is just like term life insurance, but is permanent in nature, covering you for life.  Best of both worlds.  Very affordable.

Our recommendation…

For the best 20 year term term life insurance, be sure it offers convertibility to Guaranteed Universal life insurance.

The Upside of 20 Year Term Life Insurance

It fits well with the needs of many people, making it “practical” in a sense.  It is a good place to start anyway.

Most people who purchase 20 year term life insurance buy it to cover their kids into adulthood when the policy guaranteed rate terminates.  Where will you be personally in 10, 15 or even 20 years?

We hope that you will be in a better financial position because your occupation has allowed advancement and ability to pay down debt such as your mortgage, cars, education debts etc.       

Those first 20 years are when most families are very vulnerable for financial devastation. New house, cars, possible student loan balances leaves a lot of financial risk for our family.

A correctly selected 20 year term policy can be there to mitigate these high risk years. 

If you need to continue coverage beyond, you have the options provided by the policy and you will be more likely better positioned financially to afford the cost of permanent insurance.

We like term life insurance for young folks who are just getting started based on the ease of budgeting. What is the point of purchasing something else that could put you in a financial pinch such as a whole life insurance policy?

Low Cost…Its Affordability

The best 20 year term life cost is cheaper than 30 year term insurance per month because the insurance company is not taking as much risk.  While 10 year term in less costly than 20, it is not usually recommended as a first policy as you very well may covering your risk exposure for considerably longer.

Contractually Guaranteed Years of No Worries

I think we can all sleep better at night knowing that if the unthinkable were to happen that our families financial needs would be met.  While term life insurance is an intangible, little else can provide the financial security better in our absence then life insurance.  This is something that is difficult to put a price tag on.

Remember, with a 20 year level term life insurance, you have a fixed premium for 20 years. The cost simply won’t go up for 20 years.  No matter what happens with your health, that premium stays the same for the full term.  Good term life insurance policies have guaranteed level premiums for the entire term.

Remember that the peace of mind comes from making sure you are properly insured.  Never under insure.  Debts you may have can still take a serious toll on the family as the policy death benefits may be not be adequate.

If you or another insured does not die during the “term,” a good policy will allow a conversion to Guaranteed Universal Life without evidence of insurability.  Just remember to heed my advice from above and convert the policy before the “term” ends.

My recommendation… do not buy a policy that does not have a conversion option built into it.  Even if an alternative is a few bucks cheaper.  Conversion options are a very important benefit.  Any term life insurance policy we recommend is going to have a conversion option included in the policy.

The Downside of 20 Year Term Life Insurance

The premiums will skyrocket upward after expiration

Remember, with term life insurance that is guaranteed level, you’re buying a level premium for the term you select.  In our example of 20 year term, you can expect rates to rise 5 to even 10 times the monthly premium you had paid during the term.  Your rate was set to your health when you applied for the coverage, not at expiration.

Buying a new term life insurance policy after expiration will be much more costly

So after your 20 year term life insurance policy has run its course and you want to insure again.

With 20 year term purchased at age 25, by age 45 when it expires and your health has slipped due to age, you can expect a new term policy to be double in cost.

Now that is a real bummer!!

It may not be a good option for someone in questionable or poor health

Insurance companies base their rates heavily on your overall health.  If you have a serious medical condition, it might not be a good choice.  Sometimes we see more favorable ratings for permanent policies such as a guaranteed universal life policy.  Guaranteed universal life (GUL) may be a more prudent decision with questionable health at the very least.

Converting the policy prior to expiration is the way to go if you need extend life insurance. You can turn the policy into permanent coverage with this feature.

Again, as stated above do not purchase term insurance that does not allow conversion to a GUL policy.

Cost of 20 Year Term Life Insurance

You have likely noticed our free, term life insurance quoting tool in the right sidebar. Take a guess on your health, select 20 year term and you can see all the top rates from all the top life insurance companies on the market shopped all at once. This tool can give you instant quotes for any type term of life insurance you need. There are dozens of top carriers laid out to shop from. Just remember, this is not a guaranteed rate not an offer for life insurance. You must apply to see if you qualify for coverage.

We offer unlimited, free term life insurance quotes to help get you started in your quest for life insurance protection.  So 24 hours a day, you have access to the best rates for term life insurance among the most competitive life insurance companies out there.

For many people, they pay exactly what this instant quote widget determined for them. 

However…

Be mindful that while these term life insurance rates are up to date, you may or may not qualify for these rates.  You see, the quoting tool has no validated information on you as an insurance risk.  You are only giving it general info about you. However, it will ask you to essentially rate yourself.

The insurance carrier you apply to at some point will determine your actual risk to them and adjust the premium up or down depending on your actual risk profile.

If you select the wrong health class and/or have a health condition…

Maybe your height to weight ratio is not in line with a particular insurer requires…have a family history of disease, a blemished driving record…all of these factors influence the actual, 20 year term life insurance cost an insurance company will offer you.

Sorry to disappoint. That is how it all works.

So How Do You Find Out Who Has The Best Term Life Insurance Then?

We can help you dial things in by speaking with us. Truth is, it is going to be a personal thing. You, as a risk profile will be suited ideally with a highly rated company with the lowest rates but the key term here is “ideally.” 

That could mean the “best” company for you may not even be in the top 5 or 10 companies listed. Then again, it may be the first on the list provided.

Ultimately, the “best company” for you will be determined after the underwriter(s) for the insurance company has reviewed your case. 

Here is the take home…

Not all insurers look at applicants the same way which greatly affects your premium.  You may not like the offer of “company A” in our instant quote widget. After investigation, Company E or F maybe the ideal life insurer for you.

A good independent life insurance agent will be able to guide you towards the best company for you so you don’t get surprised, overcharged or declined. That is their business. You don’t pay a nickel extra for it either. This is the way you get the lowest, actual cost of coverage.

Don’t Cut Corners.  The Stay At Home Spouse Must Be Insured As Well

We just talked briefly about obtaining a quote for life insurance.  What is the biggest mistake couples make when purchasing life insurance? 

The assumption that the “breadwinner” is the only one that needs to have life insurance!! 

Wrong!!  Don’t go there to save money.  

Married couples are a team, period.  While the breadwinner is out bringing in the paycheck, the stay of home spouse is saving the family money by performing important work as well.  Cooking, cleaning, full time babysitter, running kids around to appointments or events, being the caregiver to sick children, paying the bills, shopping for groceries etc.  This is daily routine. Look up the cost of a live in Nanny.  

Folks, this is something that takes a lot of time and money.

Don’t believe me?

Just investigate the cost of a live in nanny.  Realize that they will not do all of the above your spouse would either. 

To put a financial value on a stay at home spouse, go to salary.com and use their calculator.  You may be shocked at the truth. 

We as adults all work hard in one way or another.  Being a stay at home caregiver can be a thankless job sometimes.  You don’t get a real paycheck do you?

The writing is on the wall for us all.  Cancer and car wrecks claim the lives of many youthful parents each year.  Make sure you are being realistic about the financial value of your spouse at home.  Life without them would be very difficult if you had to pick up all of their responsibilities wouldn’t it?

If the unthinkable occurred, know the financial starting point you would have to offset. Plan for it.

So, how do we move on and pay for the help we will need?  I think you understand now if you did not already. 

Term life insurance can remove this risk. 

Don’t pinch pennies on the future of your family. That is playing games with your loves ones fate.

Family dreams are destroyed by not having life insurance on both Mom and Dad…all to save less money than is spent on coffee at Starbucks each month!!  If your still not sure about all this, read this article containing information provided by a TV station and AAA.  There is a link there at the top of the article to the actual news footage to review as well.

Don’t kid yourself. If you have been wondering about whether you or your spouse need it or not, call and talk to a reputable independent agent/broker and get a consultation. It should be free and unbiased from these folks.

For the vast majority of people who need coverage, term life insurance rates make it simple to manage into your budget.

Do You Have Health Issues?  We Can Help You Get Coverage

At Special Risk Life, we regularly see individuals who live with high risk medical issues such as diabetes, heart attacks, autoimmune disease and even cancer. 

We’ve seen it all. 

We are here to help you get you a prompt approval at a rate the you can afford on what is best for you. 

Here are some simple tips to find your best rate on high risk life insurance.

Blending Other Life Insurance With 20 Year Term

Sometimes we may make a recommendation to purchase two life insurance policies to save our clientele money and get them a better value for the financial protection they are paying for.

Let’s say you have new 30 year mortgage on a home and have a family with 3 kids. You and your spouse are planning financially to see your kids have money to go to college. Early on, as careers are new, with a house and car payments for Mom and Dad, there is a lot of financial risk.

Sometimes it makes sense to have more coverage for the first 10 years while the mortgage, vehicles and any other debt gets paid down.

Using a blending strategy with this this fictitious example, our largest policy is a 20 year term.

Now…

Take out a smaller, 30 year term policy combined with a smaller 20 year term that meets the family needs analysis. After 20 years most of the mortgage is paid off and the kids are close if not out of college. Now the 20 year term policy expires and while the smaller 30 year blended policy has 10 years of protection left. Yes, your death benefit has dropped down, but now you and your spouse have had enough time to pay down the home and have accumulated some of your retirement. Kids are adults and Life insurance has done it job.

So, after 10 years, the remainder of coverage ends, your home is paid off and you are close to retirement.

If the unthinkable happens at any time in this 30 year period and something happens to either Mom or Dad, the size of the total life insurance will reflect the financial risk of the family at that time. The greatest risk is when you are young and raising a family. Maximize for that time, minimize later as exposure diminishes. Best way to over being over insured yet not under insured in my opinion.

Hopefully that makes some sense!!

There are a few different ways to used blended strategies to save money and optimize coverage when it is most needed but I want to wrap this article up.

What’s The Best 20 Year Term Life Recommendation…

If you have any unanswered questions regarding term life ins or any other life insurance help… give us a call for assistance…800-598-6445.  We are happy to answer your questions and provide some guidance.  We can also help you sort out the term of life insurance that will be best suit your goals.

What is best for you versus someone else is most often completely different. Life insurance is about financial protection and the value of the insureds life to others around him or her.

Age and needs change the whole dynamic. Some insurance carriers will accept you at better rates than others.

It does not matter if you have a quote from 10 different term life insurance companies. Until the underwriting is completed, the lowest quote company could end up being the most expensive of those 10.

That is why you bring in a professional to sort out who the best is for you. Personally, I like Banner Life and Protective for their term life insurance products but I have lots of clientele with completely different companies.

One of my personal term policies is with a small company later bought up by Protective. I was able to obtain preferred plus rates with them and they had a great financial rating of an “A” according to A.M Best. This was the “best” 20 year term life insurance for me.

Term life insurance with a 20 year term period is the most popular followed closely by 30 year term insurance.

It is just very practical for the younger generations or those just looking for temporary coverage for a defined period of time and/or those on a very tight budget.

Remember, it is better to have some coverage than no coverage. The future of our families are too important.

With term life insurance, you are paying for pure insurance protection with no fluff.

Are there really term life “Pitfalls?”

Yup. It is not permanent, so your low rate will skyrocket someday. That is the end of the “term.”

In a case of some low quality products, the coverage just terminates at a set age regardless of health or goes up in price as you age.

Be sure you understand the limitations and that this is not an ideal product for of the 50+ crowd.

Hope this article helped you better understand term life insurance and in particular, the popular 20 year term life insurance product. 

As always, feel free to comment or provide suggestions below.  Have a good day.

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