10-year term life insurance is a life insurance policy that covers only the policyholder for 10 years, starting from the day of purchase. A term life insurance policy for 10 years provides short-term protection for the policyholder’s beneficiaries, and it is usually not as expensive as other insurance policies.
However, if you are looking for simple and less expensive life insurance, then you should opt for term life. A better understanding of how term life insurance works will enable you to decide if a 10-year policy is suitable for you.
A term life insurance contract is a contract between a policyholder and the life insurance company. In exchange for premium payments, the insurer pays a death benefit to your beneficiaries if you die.
How Does 10-year Term Life Insurance work?
10-year term life insurance is quite different from other life insurance policies that we know. In this type of life insurance, it is the policyholder who pays the insurance company a monthly premium to keep the policy active.
If the policyholder dies while the policy is still active, the insurance company will pay the agreed-upon death benefit to the beneficiaries of the policyholder.
How Much Does 10-Year Term Life Insurance Cost?
10-year term life insurance costs about $10 per month, and the highest it can go is $75 per month. However, the cost of this insurance still depends on the age, health, and desired coverage level of the policyholder. Policyholders under the age of 50 can expect to spend less than $20 per month for $250,000 of coverage.
Who Should Consider 10-Year Term Life Insurance?
Not everyone will benefit from 10-year term insurance. However, these are the types of people who will benefit from this type of insurance.
- Individuals close to retirement who want to provide financial protection to their loved ones for a specific period after their retirement.
- It is suitable for people with short-term financial obligations, such as paying debts.
- People who are unsure of the coverage they require can buy this plan.
- It is suitable for individuals who may undergo significant life changes within the next decade.
Since 10-year term life insurance offers flexibility, the policyholder can take time to seek clarity on whether or not to extend the term in the future.
Benefits of 10-Year-Term Life Insurance
Purchasing 10-year term life insurance is not only beneficial to you as the policyholder but also to your beneficiaries. Here are some reasons why you should get this insurance policy:
• Simpler policies
You will be making a big mistake if you purchase an insurance policy without a better understanding of what the policy is all about. However, a term life insurance policy is not complex compared to some permanent life insurance policies.
• Flexibility to end, review, or convert policy after a term
This insurance policy is flexible in the sense that you can easily end the policy, review the policy, or convert the policy after the term.
When a term life insurance policy ends, most insurers give the policyholder several options. This is to show that it is less restrictive than permanent life insurance policies.
• Good for short-term insurance needs
Purchasing this type of life insurance guarantees peace of mind to policyholders as it is suitable for short-term insurance needs.
• Cheaper premiums
Term life policies are cheaper than permanent life insurance. But the cost of this insurance depends on the policyholder’s age, health, and the death benefit they want.
What Factors Affect the Rates of 10-Year Term Life Insurance?
Certain factors affect this insurance rate, and they include:
• BMI
The body-mass index of the policyholder can increase the risk of a serious health condition. For this reason, insurers will charge those with high BMIs more than those with lower BMIs.
• Smoking
Policyholders who smoke are at risk of lung cancer and other illnesses. This is why insurers charge smokers more than non-smokers.
• Age
Policyholders under the age of 50 pay more for term life insurance than younger adults.
• Health history
Insurers charge individuals with a low health history more for 10-year term life insurance. Note that a poor health history is a red flag for most insurers.
• Current health
Policyholders who have serious health issues tend to die during their policy term. If you are in this category, you will have to pay higher premiums.
How to Apply for a 10-Year Term Life Insurance Policy
To apply for this insurance, just follow the steps below.
• Evaluate your needs
The first step is to assess your financial situation, obligations, and future goals. This is to help you determine the appropriate death benefit amount and policy term that align with your specific needs.
• Research insurance providers
After evaluating your needs, you can go ahead and research and compare different insurance providers to find a reputable company that offers 10-year term life insurance policies.
While you are doing your research, look out for a company with a strong financial track record, competitive premium rates, and favorable customer reviews.
• Obtain quotes
One of the ways to obtain quotes is to contact insurance providers or use their online platforms to obtain quotes for a 10-year term policy.
However, you have to provide some information about yourself, like your health condition, relevant medical history, lifestyle, and age.
• Complete the application
Now you can complete the application form once you have chosen an insurance provider and decided on the coverage amount.
• Undergo a medical exam (if required)
You may have to undergo a medical exam before applying for this insurance. But this depends on the coverage amount and the insurance company’s underwriting process. The medical exam includes blood work, a review of your medical history, and measurements.
• Review the offer
The insurance company will provide you with an offer that outlines the coverage terms and premium rates once you have evaluated your application materials and premium rates.
Take time to thoroughly review the offer, including any additional riders available, exclusions, or clauses.
• Accept and make payment
If you have reviewed the offer and are satisfied with it, you can go ahead and accept it. You can also start making your initial premium payment.
• Policy Delivery
Once you have made the payment, you will receive a copy of the policy documents, along with your policy contract, terms, and conditions.
Frequently asked questions
Can I cancel my 10-year term life insurance policy before the term ends?
Yes, you can cancel your policy at any time during the term. However, you will not receive a refund of premiums paid, and you’ll lose coverage. It’s best to consult with your insurance agent or financial advisor before making any decisions.
How much does a 10-year term life insurance policy cost?
Costs vary depending on factors such as age, health, gender, and coverage amount. Generally, 10-year term policies are more affordable than longer-term or permanent policies.
What happens after the 10-year term ends?
After the 10-year term, the policy expires. You can choose to renew the policy, convert it to a permanent policy, or let it lapse. However, renewing or converting may require higher premiums due to age or health changes.
Who should consider a 10-year term life insurance policy?
These policies are often suitable for individuals with specific financial obligations or responsibilities that will be fulfilled within a decade, such as paying off a mortgage or funding a child’s education.
