Everything You Need to Know About 10-Year Life Insurance Policies

10-year life insurance is a type of term policy and it can be a great option for people in various situations. If you need to pay off a mortgage, put your kids through college, or plan for retirement within the next 10 years, a 10-year term policy is an efficient, affordable tool to keep you covered during that time. Alternatively, if you plan to convert your short-term policy to a permanent one, 10-year life insurance can also serve your needs.

Here we’ll discuss everything you need to know about 10-year term life insurance and also show you where you can get life insurance online. An informed consumer makes smart choices, and we’re here to help you along the way.

10-Year Term Life Insurance Definition

Before we can understand what 10-year life insurance is, we need to understand the basics of term life insurance. Term life insurance is a type of life insurance policy that lasts for a specific number of years, or term. Term life insurance policies are typically sold in increments of 5. Most carriers start with a minimum term policy of 10 years and go up to 30, though you can find 1- year terms, 5-year terms, and even 40-year terms through some insurers.

Here’s how term life insurance works: You pay monthly premiums to a life insurance company, which, in return, agrees to pay a lump sum to the beneficiary of your choosing in case you die. If you die during the policy’s term, the listed beneficiary can claim the death benefit. As long as you’ve paid all the monthly premiums and provided accurate information on the application, claiming the benefit should not be a problem. The death benefit is usually paid out tax-free and is used by the beneficiaries however they see fit.

10-year policies can be obtained both with an exam and without one depending on your health and budget.

Term versus Whole Life Insurance

Term life insurance is arguably the most popular type of life insurance available, mainly due to its affordability. Another popular type of life insurance is whole, and it can be significantly more expensive than term. The higher cost is not without benefit however — these policies have no expiration date and also include a cash value component.

Term, which is less expensive, is life insurance in its purest form. You pay monthly premiums in the hope that the death benefit will never be claimed. Once your term is over, you can consider your monthly premiums money well spent on peace of mind.

Term Life InsuranceWhole Life Insurance
Mainly sold in policies of 10, 20, and 30 yearsPolicies have no expiration date
Pure life insuranceInclude a cash value component that can be used to pay monthly premiums, invest, or borrowed against
Popular due to affordabilityCan range from 5-15 times more expensive than term policies of the same coverage


Why Purchase a 10-Year Term Life Insurance Policy?

Why Purchase a 10-Year Term Life Insurance Policy infographics

Anyone who buys a 10-year term policy knows that come 10 years, their affordable low premium on their term will come to an end. no longer have life insurance coverage. What kind of situations call for coverage for just 10 years? You’d be surprised how many.

Covering daily expenses

Young people or couples who have lots of credit card bills and/or high living expenses often think that they can’t afford life insurance. On the other hand, once you enter the adult world, life insurance becomes a necessity. 10-year term life insurance is an affordable way for people in their 20s to get valuable coverage that they can actually afford (see sample rates below). When it’s over, you can either renew it or buy a different one with more coverage. If you buy a 10-year policy in your 20s, you will likely still be in good enough health to get decent rates 10 years later.

Paying off student loans

If you have student loans that you estimate can be paid off in about 10 years, a 10-year term life insurance policy is a good way to ensure that your loved ones won’t be saddled with your debt in case the worst happens. In this case, once the 10-year policy is over, you would have the same options as above: do nothing, buy a new one, or convert your current one to a permanent policy. renew.

Paying off a mortgage

If you have between 5 to 10 years left on your mortgage payments, a 10-year term policy is an affordable, efficient way to ensure that your loved ones won’t be burdened with paying off your debt in the event that you die early.

Putting your youngest child through college

Parents who are 10 years away from putting their last child through college often choose 10-year term life insurance, since it is affordable and also ensures that your baby will have the necessary funds to get a college education no matter what.

Spouses approaching retirement

If you’re approaching retirement age and still don’t have life insurance, 10-year policy is a way to ensure that your spouse will have enough to live on until retirement if something happens to you.

Adding a supplemental life insurance policy

If you purchased a 30-year term policy or whole policy when you were in your 20s or 30s, great. But what happens if you’re 20 years into the policy and realize that the coverage you have isn’t enough? Instead of canceling the policy and purchasing a policy with higher coverage, which would likely be more expensive, you can buy a 10-year term policy, pay little in monthly premiums, and get the coverage you need.

Securing a Loan

If you own a small business or need to secure a large loan for another purpose, many lenders will want to see that you have life insurance so they know their loan will be protected. A 10-year term policy is one of the most affordable types of life insurance available, and it will help you get the loan you need.

What Happens When Your 10-Year Term Policy Ends?

When the term of your 10-year life insurance policy comes to an end, you will probably be given the option to continue your policy at a much higher rising cost, convert it to a whole policy, or let it expire. Once expired, you will no longer have life insurance coverage in place.

If you haven’t achieved the goal you set out to do when you purchased the policy, such as paying off your mortgage or ensuring a comfortable retirement for your partner, you will probably want to buy a new policy, if you can qualify.

A note about this: When you renew a term life insurance policy after 10 years, you will definitely be given higher monthly premiums the second time around. This is due to the nature of life insurance — the general rule of thumb is that the younger and healthier you are, the lower your premiums will be. Even if you haven’t developed moderate or serious health issues 10 years down the road (hopefully), you’ll still be charged more based on your age alone. Therefore, before you buy a 10-year term life insurance policy, it’s important to make sure that 10 years will suffice for your needs.

Why Buy “Only” a 10-Year Policy?

At this point you may be thinking, if there’s a chance that 10 years won’t be enough, why not purchase a longer term from the get-go? Why does so much careful consideration need to go into it? Better to be safe than sorry, right?

While these thoughts are true, they don’t take into account one important factor: the cost of your monthly life insurance premiums depends on the length of your term. A 10-year life insurance policy will cost less than a 15 or 20-year policy.

Therefore, before buying any type of term life insurance, it’s important to calculate exactly how long you need the policy for. While you don’t want the term to be too short, you also don’t want it to be too long and end up paying higher premiums unnecessarily.

Determining How Much Coverage You Need For Your 10-Year Term Life Insurance Policy

The length of your term is one factor that influences the amount of your monthly premiums. Here are some others:

  • Gender
  • Age
  • Health
  • Smoking status
  • Lifestyle
  • Amount of coverage

Just as it’s important to choose the exact length of your term — not too short and not too long — the same is true for the amount of coverage. You don’t want to take too little and leave your loved ones short. But you don’t want to take too much and pay more in monthly premiums.

For example, if you owe $125,000 on your mortgage, your life insurance policy should reflect that. There’s no need to get a policy of $200,000 if all you need is $125,000. At the same time, choosing a $100,000 policy won’t be enough.

The above is a simple example, but sometimes, figuring out how much coverage you need can get more complicated. The DIME method is a way to help calculate how much insurance you need. DIME is an acronym for Debt, Income, Mortgage, and Expenses — when you add them all together, you can arrive at the amount of life insurance you need. The exact amount is important since it will directly affect how much you pay in monthly premiums.

How Much Does 10-Year Term Life Insurance Cost?

Since there are so many different factors that go into calculating the amount of monthly premiums, the exact cost of a 10-year term life insurance policy differs from person to person. Underwriters, who are tasked with the job of assessing the risk that each applicant poses to the insurance company, take into account gender, age, health, lifestyle, term length, and amount of coverage.

Below is a list of sample rates for a $250,000 10-year term life insurance policy for a person in average health.

10-Year Term Life Insurance Quotes

AgeMale Non-SmokerMale SmokerFemale Non-SmokerFemale Smoker
20$10.53$32.50$9.86$24.96
30$10.53$33.14$9.86$26.90
40$13.17$47.79$12.07$41.97
50$25.72$111.95$21.54$87.19
60$65.77$263.11$48.09$181.41

There are several things to note about these price quotes. First, notice that there is almost no difference between 20 and 30-year-old male and female non-smokers, while the difference between smokers is negligible. However, between ages 40 and 50 and 50 and 60 for non-smokers and smokers, the premiums climb significantly. This is why it’s important to buy life insurance young!

Another thing you may notice is that the female rates are lower than the male rates across the board. This is because statistically, women live longer than men.

10-Year Term Life Insurance for Smokers

Here comes the unpleasant part — you’ll notice that smokers, no matter what age, have much higher premiums than non-smokers. From age 50 and up, the price difference is really significant. For males at age 50, the price jumps from about $25 to $111, while at age 60, the price jumps from $65 to $263! While the quotes for female smokers of the same ages don’t get as high, women smokers are still looking at a $50-$120 difference. That’s huge!

The reason for the huge difference in smoker/non-smoker rates is that smokers have a higher mortality rate. According to the CDC, smokers die 10 years earlier than nonsmokers. Insurers mitigate their risk by hiking up the monthly premiums.

To avoid intimidating rates from insurance companies, smokers can do one of two things: quit smoking, which is easier said than done. And even then, they’ll have needed to quit smoking for at least a year in order to qualify for non-smoker rates, and even longer to qualify for better health classes of non-smoker rates. The other option is to buy life insurance at a young age. That way, they can at least lock in lower rates. However, if a smoker buys life insurance young but doesn’t plan on quitting, they may want to consider a policy longer than 10 years. This way, they can avoid higher premiums if they need to renew their policy. If 10 years will definitely suffice, then they should lock in the lower rates when they can and not worry about a longer term.

Bottom Line: Is 10-Year Term Life Insurance Right For You?

10-year term life insurance is a great option for anyone who needs coverage of 10 years. It’s affordable, can easily be converted into a permanent policy when the term is over, and most importantly, it gives you peace of mind knowing that your loved ones will be protected financially.

Buying any type of life insurance is a highly personalized decision based on finances and family situations. However, since there are so many factors to consider, you may want to seek professional advice. A Sproutt Licensed Sales Advisor can help you determine the right amount and duration of coverage and help you get started. If 10 years is indeed enough to cover your needs, you can rest assured that your loved ones will be covered and you will get one of the most affordably-priced life insurance policies on the market.

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