Is a 30-year term life insurance policy right for you?
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Term life insurance policies commonly come with a term length of 10, 15, 20, or 30 years. It's challenging to find a term policy that lasts longer than 30 years: at that point, it may make more sense to get a whole life or universal life policy with permanent, life-long coverage. A 30-year policy can be a valuable choice because it provides cost-efficient protection for a very long time. But is it the best choice for your needs? Before buying, you should think about your current financial responsibilities and future plans, including major financial obligations like mortgages, education costs, and other long-term debts. Also, what happens after 30 years are over? This article will help you figure these things out and suggest other life insurance options to consider.
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The best way to start learning about term life insurance is by getting an actual quote. This calculator will estimate your need and give you a complimentary term life quote in under a minute, with no obligation. The initial quote will be for a 20-year policy but see what happens when you choose a 30-year term.
30-year term life: Key features and benefits
Level premiums | Income tax-free benefit1 | No cash value | Temporary coverage |
|---|---|---|---|
Payments in "level" policies don't go up or down for the 30-year coverage period. | The policy provides a death benefit to your beneficiary in a lump sum with no taxes owed if the insured passes away during the fixed period. | Unlike whole life insurance, there's no cash value beyond the death benefit. | When the term expires, so does your protection. You have to get a new policy – with higher premiums – to continue coverage. |
Term life insurance is typically less expensive than permanent life insurance –—and more cost-effective than most people think. The Life Insurance Marketing and Research Association (LIMRA) found that 72% of Americans overestimate the cost of life insurance — with younger Americans believing the price of term life insurance to be three times higher than the actual cost.2 However, the longer the term, the more you pay each month for coverage. Why? Because there's a higher likelihood the life insurance company will have to pay a death benefit: the odds a given person will pass away in one year are typically low, but many things can happen over 30 years, so the odds of a payout rise. That's reflected in the cost of life insurance: according to our calculator, a 30-year-old non-smoking female can get $1,000,000 of 20-year term coverage for just $48 a month; that doubles to $96 a month with a 30-year policy.
What happens after 30 years are up?
Term life policies — by definition — only last for a limited amount of time and are just designed to give your beneficiaries a valuable lump-sum death benefit payment if you die during that period. So, for example, it's a way to protect a family until the children are grown up and on their own. However, unlike permanent forms of life insurance, term policies don't have cash value.3 So, when coverage expires, your life insurance protection is gone — and even though you've been paying premiums for 30 years, there's no residual value. If you want to continue to have coverage, you'll have to apply for new life insurance. The only problem is, the cost will be much higher: when it comes time to renew, you'll be 30 years older, with 30 years less life expectancy. In most cases, renewing the policy at this stage does not make financial sense for most people, as the premiums are often prohibitively expensive compared to the value received.
You may be able to convert your policy to permanent coverage
Many life insurance companies offer "convertible" term policies. Convertibility lets you change your coverage to a permanent whole life policy, which provides lifetime coverage without getting a new medical exam — which would likely increase your cost. Guardian lets you convert a life insurance contract at any point in the first five years — and offers an optional Extended Conversion Rider which lets you do so for the duration of the insurance term.4
Why convert? If you're not a diligent saver, you may be attracted to the wealth-building aspect of whole life insurance. If you've had a serious health problem — for example, a heart attack — it may be difficult to get other coverage. Or maybe you just want permanent life-long insurance protection. 30-year coverage might seem like the best choice now, but things change.
When can 30-year term be a fit? And when might it not be a fit?
Consider for: You have a young family | May not fit for: You have a special needs child |
If your kids are young and you just want coverage that lasts until they are adults, this can be a choice to consider. If your kids are older, you could also consider a less-expensive 20-year policy. | Life insurance is often used to help pay for the care of a special needs child after the parents pass away. If the term ends before that happens, there's nothing left for the child. That's why many special-needs parents have permanent whole life or universal life policies. |
Consider for: You want lasting, cost-efficient coverage | May not fit for: You want wealth-building cash value |
Term is sometimes called "pure life insurance" because there's no cash value — it's designed purely to give your beneficiaries a payout if you die during the term. Since no premium dollars are invested in your policy’s cash value, you can get a bigger benefit per premium dollar than permanent life insurance. Level premiums on a 30-year term life policy can also make it easier to budget. | If you want life insurance with a cash value component that builds tax-efficient and you can use while you're still alive, you should look into a permanent whole life or universal life policy. 5 |
Consider for: You want coverage until you retire | May not fit for: You want an asset to help fund retirement |
You want life insurance to replace earnings during your working years, but you don't think your family will need a payout when you're no longer the breadwinner. In that case, this can be an option — assuming you retire within 30 years. | Since term life doesn't have cash value, you can't borrow against any built-up value or withdraw from your policy for money to supplement your retirement. Consider permanent whole life or universal life coverage instead. |
Consider for: You have long-term debts | May not fit for: You really want life-long coverage |
Maybe you just took out a 30-year home loan, and you're worried about how your family will pay it off if something happens to you. A 30-year policy to cover the principle (payoff) amount can help alleviate that worry. 30-year term life insurance can also help cover other debts, such as student loans or personal loans, providing broader financial protection for your loved ones. | If you don't feel you can put an "end date" on life insurance needs for your family, then you should probably look into permanent whole or universal life insurance before getting term coverage. |
Other kinds of life insurance you may want to consider:
20-year term life
If you're not sure you need coverage for 30 years, you could save money every month by going with a 20-year term length for the same coverage amount. However, if you're pretty sure you need coverage for 30 years, consider a 30-year term. The monthly premiums may be higher, but in the long run, it will typically cost less than reapplying for 10-year term coverage after your 20-year policy ends. Why? The insurance contract you get two decades from now will cost more: one of the most basic life insurance rules is that price goes up as you get older. Also, health issues tend to crop up over time. For example, you could develop high blood pressure in a few years. Even if well-controlled, that kind of diagnosis will raise the cost of new coverage. In some cases, your health status could make a new policy unaffordable. Other factors, such as your lifestyle, occupation, or financial commitments can also influence life insurance rates and eligibility.
Permanent life insurance
Thirty years is a long time, but if lasting coverage is essential to you, consider permanent life insurance. It lasts your entire life, as long as you pay the premiums. These policies include a wealth-building component — the policy's cash value — which helps make coverage last indefinitely while providing other benefits. A portion of your premium dollars can grow tax-deferred as cash value over time. Within a few years, it can grow into a useful sum that can be borrowed against in a tax-efficient way, used to pay premiums, or even surrendered for cash to help fund your retirement. In any case, families may be entitled to the entire death benefit payment from the first day the insurance contract is in effect.
The two main permanent policy types are whole life insurance and universal life insurance. Whole life insurance is the simpler of the two — the premium remains the same for life, the death benefit is guaranteed, and the cash value grows at a guaranteed rate.6 Universal life insurance can be less expensive, but the premiums, benefit, and cash value growth rate can vary.7 In any case, both kinds of policies are more complex than a term policy. Key differences between the three policies are summarized below but if you think you want permanent life insurance, you should speak with a financial professional who can better explain and tailor your policy to your needs.
Term life, whole life, and universal life compared
Term Life Insurance | Whole Life Insurance | Universal Life Insurance | |
|---|---|---|---|
Coverage period | Limited to a specific term | Permanent | Permanent |
Builds cash value | No | Yes | Yes |
Cost for a given death benefit | Less expensive than whole or universal | More expensive than term | More expensive than term |
Premiums | Typically fixed | Typically fixed | Can vary |
Income tax-free death benefit | Yes | Yes | Yes |
How to buy life insurance
Through your workplace
Getting life insurance at work can be a good idea. It's easy to qualify for, and you get affordable group rate pricing. However, you may not be able to get a level term policy that locks a rate in for 30 years. Workplace plans typically offer "yearly renewable" term coverage, and the rate can go up at each renewal. Also, the coverage amount may be limited, and you might want more financial protection for your loved ones. Fortunately, other options are available.
Online
It's easy to shop for coverage and get a term life insurance quote from your computer, tablet, or smartphone. If you're sure you want a 30-year term policy, and you know how much coverage you need, this may be an option. Many companies, including Guardian, make it simple to get term life insurance quotes, compare costs, and apply for coverage – all online.
Working with a financial professional
If you're unsure about the length of coverage you need or what type of life insurance policy is best for you – term or permanent – consider working with a financial professional. These individuals can provide information about the options, riders, and best life insurance companies to work with to help realize your immediate needs and long-term goals. If you have a financial professional you trust, ask them how much life insurance and what type of policy you should have. Otherwise, Guardian can connect with a financial professional who will listen to your needs, tell you about the best ways to meet those needs within your budget, then help you decide.