What is 20 year term life insurance? – Forbes Advisor

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When buying life insurance, you might consider a 20-year term life insurance policy if you want affordable coverage that fixes your rate for the next two decades, even if your health changes.

What is 20 year term life insurance?

A 20-year term life insurance policy guarantees you to lock in a rate for 20 years. You pay a level premium and if you die while your coverage is in effect, your beneficiaries receive a death benefit.

There is no cash value component with term life insurance as there is with permanent types of life insurance. However, term life insurance is generally the cheapest type of life insurance to buy.

How does a 20-year term life insurance policy work?

When you purchase a 20-year life insurance policy, you select:

  • Coverage amountalso called death benefit.
  • Beneficiaryy, or beneficiaries, who will receive the death benefit.

Your beneficiaries can use the death benefit to cover all expenses if you die, including funeral and burial expenses, education costs, utility bills, or unpaid debts, such as a car loan or mortgage.

The amount of coverage you purchase will depend on your financial goals. For instance:

  • If your goal is to pay off your home, you could buy enough coverage to cover the remaining balance of your mortgage if you die.
  • If your goal is to provide income replacement to help your loved ones manage household expenses, you can choose a death benefit equal to 10 years of your income.

Related: How much life insurance do you need?

What happens after 20 years?

At the end of the life insurance term of 20 years, the fixed premium period expires. If you decide not to renew the policy or if renewal is not available for the policy, no death benefit will be paid to your beneficiaries.

Can a term life insurance policy be extended?

A 20-year term life insurance policy can usually be extended beyond the original term, but this will significantly increase your premiums and the rate will continue to increase each year. Renewing after the level duration period is usually not a good option due to expense.

You may also have the option of converting term life insurance to permanent life insurance, which typically lasts a lifetime and can create cash value. But if you don’t need permanent life insurance, buying a new term life insurance policy would be more affordable.

All of these options will increase your premiums after the level term of 20 years, so the smart choice is to buy term life insurance for the number of years you will need. If you expect to need life insurance for more than 20 years, consider purchasing a 30-year term life insurance policy.

Who is 20-year term life insurance for?

Here are some factors to consider when deciding if 20-year term life insurance is right for you.


Your age affects how much you will pay for term life insurance. Life insurance quotes become more expensive as you get older, and even more so if your health declines.

It’s best to lock in a rate for the number of years you’ll need life insurance. This will save you from having to buy a new term life insurance policy, with higher premiums for the same death benefit.

However, if you are approaching retirement age and only want life insurance to cover your remaining working years, a 10-year term life insurance policy may suffice. Due to its shorter duration, your premiums would be more affordable.

Financial responsibilities

Taking stock of your financial responsibilities will help you determine if a 20-year life insurance policy is right for you. You might consider this type of life insurance if, over the next 20 years, you want the death benefit to help your beneficiaries:

  • Make car payments
  • Pay a mortgage
  • Payment of credit card bills
  • Plan your retirement
  • Support a spouse and/or children
  • Student loan repayment
  • Saving for education costs

life changes

Major life changes, such as having a baby, might necessitate purchasing 20-year term life insurance. If you want to make sure your child’s college education is paid for, for example, you might want to set up a 20-year policy to cover tuition if you were to die.

How much does a 20 year term life insurance policy cost?

The average cost of a 20-year term life insurance policy is $252 per year for $500,000 coverage for a 30-year-old woman, according to Forbes Advisor life insurance rate analysis.

The amount you pay for life insurance will generally depend on several factors, including your age, gender, health, and smoking status. Profession and hobbies can also be taken into account. Here are the average life insurance rates for a 20-year term life insurance policy for different ages and genders.

Average 20 year term life insurance rates per year

Which companies have the lowest 20-year term life insurance rates?

Here are examples of annual 20-year term life insurance rates from some of the cheapest life insurance companies.

Cheap 20 year term life insurance for men aged 30 to 50

Cheap 20-year term life insurance rates for women aged 30-50

Is a 20-year term life insurance policy worth it?

A 20-year term life insurance policy might be worth it if you’re looking for a simple, affordable life insurance policy that guarantees fixed premiums for 20 years and a guaranteed death benefit if you die while on the policy. is in effect.

Don’t forget to consider what happens at the end of the 20 years. If you think you’ll still need coverage after 20 years, it would be best to lock in the rates for a 30-year term life insurance policy or maybe even buy permanent life insurance, designed to last a lifetime.

Compare life insurance companies

Compare policies with the 8 major insurers

20 Year Term Life Insurance FAQs

Do you need a medical exam for a 20 year term life insurance policy?

After applying for a 20-year term life insurance policy, the insurance company may ask you to take a life insurance medical exam. An exam usually includes height, weight, blood pressure, blood and urine samples, as well as questions about your health and any prescriptions you are taking.

If you’re young and healthy, you’ll have more no-exam life insurance options.

Is a 20 year term insurance policy more expensive for a smoker?

Smoking will generally increase your 20-year term life insurance premiums because it means more risk for the insurance company.

Quitting smoking before buying life insurance will help you qualify for better premiums. But if you quit smoking after buying a term life insurance policy, you can ask your insurance company to reconsider your life insurance rate.

Related: Life insurance for smokers

Can you cash in on a 20 year life insurance policy?

Term life insurance has no cash value, so you cannot “cash in”, withdraw money or take out loans on the policy.

If you are interested in cash value, whole life and universal life are forms of permanent life insurance that have a cash value component.

Related: Life insurance with cash value explained

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