What is 20 Year Level Term Life Insurance?
Term life insurance is the most inexpensive way to cover the economic loss in the event of the death of a loved one, business partner, or significant other. It's generally referred to as temporary insurance because it's not designed to last forever. Twenty year level term is one of the most popular forms of life insurance policies and is purchased for all types of needs.
What is 20 year level term insurance?
Twenty year level term insurance is a variation of level term insurance that offers a fixed, guaranteed rate, or premium, for the first 20 policy years. Your actual rate is based upon a number of underwriting criteria including your age and health, the amount of insurance and any smoking as well as hobbies or hazardous sports or avocations. Twenty year term is relatively inexpensive easy to acquire and works quite well in protecting a longer term need.
How does term life insurance work?
A 20-year level term policy guarantees a fixed rate for a 20 year time period. However, you can drop coverage at any time simply by discontinuing premium payments. The real advantage is that the insurance company is on the hook for the level rate for the first 20 policy years. In other words, you can drop the coverage at any time without penalty but the insurance company must honor your rate for the first 20 policy years. This makes these policies extremely effective in covering longer-term needs.
At the end of the 20th policy year, your rate will increase significantly and most 20-year term policies are not continued beyond the initial level term period. However, most 20 year term policies are renewable to age 95 and can be continued as long as the higher premiums are met.
Features and Benefits of 20 year level term insurance
Most 20 year level term insurance policies have several valuable features and benefits including renewability and convertibility. Renewability means that even after the 20th policy year coverage can be maintained albeit at a higher rate. In other words, the coverage does not end after 20 years. You have the option to "renew" the policy if you continue to pay the higher premiums beyond the end of the 20th year. Most policies are renewable to age 95.
Convertibility refers to the ability to "exchange or convert" your policy, without proving your health, for a whole life, universal life or more permanent form of life insurance that will offer you a level rate for a longer period of time, usually your lifetime. This "conversion option" is extremely valuable if you become sick or are uninsurable. Even if you cannot qualify medically for life insurance anywhere else, you can always convert your policy without evidence of good health.
Finally, life insurance policy riders are available with most 20-year term plans. These additional policy options include children's term insurance rider, waiver of premium rider and accidental death insurance and may be available depending upon the life insurance company's offerings.
Why buy 20 year term insurance?
There are many reasons to buy twenty year level term insurance but it is most effective when you have a need that extends beyond 15 years but not beyond a 20 year time period. For example, if you have a mortgage that has 18 years remaining, a 20 year level term policy will effectively cover your mortgage. In this case if you purchased a 10 or 15 year term, you would be covered for the short run but there would be exposure at the end of 15 years. By securing a 20 year term policy now, you can have the peace of mind knowing that your mortgage will be completely protected.
Income protection is another great reason to consider a 20-year level policy. Let's say that you are 48 years old and want to retire at 65, you can buy a 20-year term policy and effectively protect your human life value or your income earnings ability over the next 20 years.
Twenty year term life insurance is one of the most popular term insurance policies sold today because of its affordability and long term guarantees. They provide great flexibility and can cover various needs. For more information, click the following link to get a quick 20-year level term life insurance quote, or please contact MEG Financial toll free at 877-583-3955.
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