To calculate the number of years of Term Life Insurance you need, it is helpful to look at the important events in your life and work around those. E.g. When will your kids graduate from college? Ending your policy shortly after that event is a popular choice. Others choose to pick a term that will end when they retire. Or when their school loans are paid off. You get the picture.
Just keep in mind that you can always drop your policy if you no longer need it. It is better to err on the side of getting a "too long" term than a "too short" one.
President, Lane Independent Agency, Southern California
How many years before your family is totally prepared to pay ALL the bills if you are gone? And will you be willing to exhaust your estate so they can pay them? Or would you rather have the insurance pay those bills for them, allowing them to enjoy your estate? In other words, don't you think your family will need that money many years into the future, even if you have grown your bank account? Life insurance is also a great way to pay on an inheritance tax free, if you go with permanent life insurance rather than term. Talk with your agent for more suggestions. Thank you. GARY LANE.
Insurance Adviser - Broker, SC Insurance Services, Oahu, Hawaii
I don't want to be a smart-alec, but how many years are you going to live? (Sorry... I did it anyway!) Term life insurance is typically best suited for temporary risks such as a mortgage or larger credit loan. Term insurance is strictly insurance against dying too soon, so how many years of term you need would depend on who you're protecting against your dying. Would the insurance be for paying of debts so your family wouldn't be stuck with them? Will your children be able to care for themselves financially in 10 years? Fifteen years? Twenty?
If you want to be able to take advantage of the tax benefits and guaranteed tax-free wealth growth that life insurance can provide you need to look at Whole Life rather than Term.
Regional Marketing Director, Capital Choice Financial Group,
I recommend only term life insurance to my clients and for most a 20 year policy is long enough to get the kids raised, pay off debt, and pay down the mortgage. Since at the end of 20 years the client won't need that original amount of coverage it can be renewed for another 15 or 20 years to cover the rest of the time needed to pay off the bills and to save enough for retirement. Never buy whole life or any form of it because you will rob yourself of better growth of and lose the flexibility of withdrawal in the event of emergencies.
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Just keep in mind that you can always drop your policy if you no longer need it. It is better to err on the side of getting a "too long" term than a "too short" one.
If you want to be able to take advantage of the tax benefits and guaranteed tax-free wealth growth that life insurance can provide you need to look at Whole Life rather than Term.