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10 year term life insurance: How it works and what it costs

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Ten years ago, no one had ever heard of COVID. Tesla stock cost $10 per share. New Yorkers were obsessed with something called the Cronut. (Mmm… Cronut…)

As for what life will look like ten years from now, who knows? But we assume this article will be written using AI and holograms.

And not to get all morbid on you, but there’s also a non-zero chance that, in the next decade, the worst could happen to you. And if it does, what would your loved ones do, and how would they pay for necessities like housing and groceries? Given that possibility, it’s worth considering whether a 10 year term life insurance policy is right for you.

To help you, here’s a look at what, exactly, is a 10-year term life insurance policy, and what it might cost.

What is a 10 year term life insurance policy?

Life insurance has been around for a long, long time. (In ancient times, it was used to support war widows.) And in a way, it hasn’t really changed since then.

Here’s how it works: A pool of people pay premiums to a life insurer, and that insurer pays out a death benefit when the insured person dies. This payment is typically a lump sum, is tax free, and is intended to provide financial protection for the family of the insured, especially if that person dies during the years when other people depend on them to pay for things like food, housing or tuition.

Term life insurance is a specific type of life insurance that provides coverage for a set period of time, often 10, 15, 20, 25 or 30 years. If you die during the term — a decade in the case of a ten-year policy — a death benefit is paid to your loved ones, those you’ve named as a beneficiary.

Who needs a 10 year term life insurance policy?

A 10 year term life insurance policy may be best suited for you if…:

If you have short-term financial commitments

Maybe you’re 20 years into a 30 year mortgage. Or you have a few years to go before your student loan debt or credit card debt is paid off.

If something were to happen to you in the next 10 years, those commitments might go unfulfilled, or fall to a spouse or relative to take care of when they’re already mourning your loss. A ten-year term life insurance policy is a way of providing financial protection for your loved ones in case you’re not around to pay for the important stuff in the years ahead.

If your kids are in middle school or high school

Maybe your house is paid off, but you expect your kids to go to college within the next ten years or so. Who would pay for their tuition? Not to mention, books, housing, and so on.

Even if you’ve saved up using a 529, or expect your children to pay their own tuition, or know that your child might pursue a path outside of college, you never know what the future might bring, and a 10 year term life insurance policy helps make sure you’re covered. After all, a life insurance payout can be used for anything — even day-to-day basics like groceries and bills.

Note that, for those with younger kids (or more time left on their mortgage), 20-year term life insurance or even a 30-year term might make sense.

If you’re retiring in 10 years

One of the benefits of term life insurance is that it’s there when you need it, and goes away when you don’t. Case in point? Your retirement. If you believe that, in a decade or so, your children will be financially independent from you, and that your spouse will be taken care of by retirement savings and Social Security, then you won’t really need the protection that life insurance offers after ten years.

Between now and then? Absolutely. But after the term expires, you’ll be spared the hassle and expense of monthly premiums.

What does a 10 year term life insurance policy cost?

Because it typically covers the years when you’re younger and healthy (read: less likely to die), term life insurance is often the most affordable type of life insurance, and makes a lot of sense for people who only need coverage during the years when they’re drawing a salary.

In other words, it’s life insurance coverage for the years when you’re responsible for paying for other people’s necessities and niceties, and / or paying for something big like a mortgage.

This is different from whole life insurance, also called permanent life insurance, which provides coverage for your whole life, but also tends to cost more because it covers the years when you’re older and less healthy. Chances are, you’re no longer paying off a mortgage or covering a child’s tuition during those later years, and you might not even be drawing a salary due to retirement. In other words, no one would suffer financially if something were to happen to you. (Emotionally, of course, is another matter.)

A ten-year term life insurance policy, then, is term life insurance coverage that lasts for ten years. (Obviously.) It is often the shortest term an insurer will offer, and will cost less than a longer term length for the same person. That said, because a ten-year-term tends to make sense for someone in their mid-40s to mid-50s, the cost of life insurance might be more than a comparable amount of coverage would for someone who is younger.

Here are some examples of life insurance rates for a 10 year Haven Term policy, issued by MassMutual or its subsidiary, C.M. Life, for an adult in excellent health:

Age Coverage $250,000 $500,000 $750,000 $1,000,000
30 Male $11.94 $14.72 $19.09 $23.45
Female $10.93 $13.00 $16.51 $20.01
35 Male $12.55 $15.59 $20.38 $25.17
Female $11.04 $13.43 $17.15 $20.87
Source: Haven Life

Keep in mind these are level term life insurance premiums — that is, you will pay the same monthly rate for the life of your policy. That’s one more reason to get a life insurance policy sooner rather than later: You’ll never be younger than you are today, and you’re likely as healthy as you’ll ever be, too.

As for how much coverage you need, the general rule of thumb is to get 5 to 10 times your annual salary. In other words, enough coverage to provide for the years when you’re no longer around to pay for things. At Haven Life, you can take out a policy for anywhere from $250,000 to $3 million, and the average term life insurance payout is $618,000.

How to get a 10 year term life insurance policy

Another thing that’s changed in the past ten years: You apply for an affordable life insurance policy online in about the time it takes to have lunch. For some people, you might even get a coverage decision in that time.

Start your journey by getting a free online life insurance quote. Peace of mind awaits.


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