The short answer
This guide answers the most common questions about term life vs mortgage protection.
The term is the part of a life policy people think about least, yet it matters as much as the amount. Too short, and coverage ends while your family still needs it. Too long, and you pay for years you may not need.
Here is how to choose between 20 and 30 year term life insurance.
Part of our complete guide: Term Life Insurance: The Complete Guide.
Quick answer
Pick the term that covers your longest important need. Longer terms cost more per year but lock in today's age. Two policies with different terms can cost less than one.
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On this page
- Term life vs mortgage protection: how term life insurance works
- Term life insurance quotes for married couples: how much term life parents need
- 20 vs 30 year term life insurance: what is a term life ladder?
- Should you buy term or whole life?
- How to compare the options fairly
- A worked example
- How long should your term be?
- How insurers decide your rate
- Who term life insurance is for
- Frequently asked questions
Term life vs mortgage protection: how term life insurance works
Term life insurance covers you for a set number of years, such as 10, 20 or 30. If you pass away during the term, the policy pays a death benefit to your beneficiaries. If you outlive the term, the coverage ends and nothing is paid.
Because it does not build cash value, term is usually the most affordable way to buy a large amount of coverage. It fits needs that have an end date: a mortgage, raising children or replacing income until retirement.
Term life insurance quotes for married couples: how much term life parents need
Children are the most common reason people buy term life. The years when they depend on you are also the years when coverage is most affordable.
A stay-at-home parent needs coverage too. If that parent were gone, the family would pay for child care and help at home. Many couples buy a policy on each parent with the same term.
Compare rates from several carriers in about two minutes. Free, no obligation.
20 vs 30 year term life insurance: what is a term life ladder?
Laddering means buying two or more term policies with different lengths instead of one large policy. For example, a 30-year policy for the mortgage and a 20-year policy for raising children.
Your total coverage is highest when your family needs it most, then steps down as debts shrink and children grow up. That can cost less over time than one big policy for the longest term.
Tip: Laddering works best when each policy has a clear job. Write down what each one is for.
Should you buy term or whole life?
Term is temporary and affordable. Whole life is permanent, builds cash value and costs more. Neither is better in every case. The right choice depends on how long the need lasts and how much you can comfortably pay.
If you are unsure, a convertible term policy keeps your options open. You can switch part of it to permanent coverage later without new health questions, within the policy's window.
How to compare the options fairly
- Compare the same coverage amount and term length.
- Check what happens at the end of the term: renewal, conversion or nothing.
- Look at the carrier's financial strength rating.
- Ask about riders included at no cost versus ones that add to the price.
How to get covered in 3 steps
- Check your rate. Pick your state and answer a few quick questions about the coverage you want.
- Compare carriers. A licensed agent compares term life insurance options from several insurers and explains the trade-offs.
- Apply and get covered. Many applications take one phone call. Coverage starts once the policy is issued and the first premium is paid.
A worked example
Say you're 34 with a $150,000 mortgage balance and 16 years left, $19,000 in other debts, and an income of $55,000. Here's one simple way to size coverage:
| Item | Amount |
|---|---|
| Mortgage balance | $150,000 |
| Other debts | $19,000 |
| 4 years of income | $220,000 |
| Total to consider | $389,000 |
In this example, a 20-year term would outlast the loan (it ends around age 54). Your own numbers will differ; use this as a starting point and adjust for savings, other coverage and future costs like school.
How long should your term be?
The right term covers the years your family would feel the loss of your income the most. For many parents, that is until the youngest child finishes school. For homeowners, it is often the years left on the mortgage.
If two needs end at different times, consider two policies with different terms. As each need ends, its premium goes away too.
How insurers decide your rate
Underwriting is how an insurance company decides whether to offer a policy and at what price. It sounds technical, but the idea is simple. The insurer wants a clear picture of your health, your habits and how much coverage you are asking for.
The application
You answer questions about your age, height and weight, tobacco use, medical history and prescriptions. Answer every question fully and honestly. A wrong answer can give the insurer grounds to contest a claim later, especially in the first two years of the policy.
Database checks
Most insurers check prescription history and a shared industry database of past applications. Many also look at your driving record. These checks are why some policies can skip a medical exam: the records answer many of the same questions.
Exam or no exam
Some policies ask for a short exam at home or work, usually a quick health check and a blood and urine sample. Others decide from your answers and records alone. A policy without an exam is faster, but it can cost more or cap how much coverage you can get.
Once the insurer finishes, it offers a rate class. Healthier applicants get better classes and lower rates. If the offer is higher than the quote, an independent agent can often take the same application to another carrier that views your history more kindly.
Who term life insurance is for
Often a good fit
- you have a need with an end date and want the most coverage for the money.
- you want to cover a mortgage, income or debts.
Maybe not the right fit
- you want coverage that never expires.
- you want a policy that builds cash value.
