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How to Buy a 20-Year Term Life Insurance Policy

https://www.goodfinancialcents.com/wp-content/uploads/2019/07/MG_5503-150x150.jpg
  • Written By:
    Jeff Rose, CFP®

    Jeff Rose, CFP®

    Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance...

    Read More
  • Updated: May 3, 2022
  • 5 Min Read
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20-year term life insurance is becoming increasingly popular. No matter which term of insurance you purchase, make no mistake it’s important to just buy it. In the event something happens to you, it’s the only way to make sure your family is taken care of.

As you’re thinking of buying the perfect life insurance plan, there are many factors that you’ll need to look at to make sure that your loved ones have the money that they need.

There are several different types of life insurance plans that you can purchase, but a common type is a term life insurance plan.

These are the most affordable kinds of life insurance and are an excellent option to give your family the protection that they need.

Life insurance can be confusing and the process of having one issued could be lengthy, but we specialize in making it quick and we’re happy to help connect you with the best life insurance policy.

Who Would Want to Consider Buying a 20-Year Term Policy?

The most common ages of people I see purchasing a 20-year term life insurance policy range between 25 and 45.

As mentioned above, many in this age range will have their largest asset paid off (their home) and if their savings are on track, should be close to being self-insured by the end of the term.

Affordability, maximum coverage, and policy length are three key aspects to nail down when looking to purchase a 20-year term.

And even if you wish to increase your face value you don’t want to overstretch your budget – it’s important to understand that there are many options in the marketplace to tailor the right plan to your needs.

How Much Does a 20-Year Term Policy Cost?

Below are some sample 20-year term life insurance quotes from some of the big carriers. As you’ll see, I ran 20 year quotes for $250,000, $500,000 and $1,000,000. I’ve listed the top 3 carriers for males and females of different ages (25, 35, and 45).

Please note that these quotes are subject to change depending on when you actually run the quote for yourself.

$250,000 20-Year Term Life Policy Quote

SexAGE20Yr Term Life PolicyCompany 1Company 2Company 3
Male25Face amount $250,000AMERICAN GENERAL
$154
BANNER LIFE
$155
SBLI
$158
Male35Face amount $250,000SBLI
$163
BANNER LIFE
$165
GENWORTH FINANCIAL
$178
Male45Face amount $250,000SBLI
$338
GENWORTH FINANCIAL
$339
BANNER LIFE
$340
Female25Face amount $250,000SBLI
$138
AMERICAN GENERAL
$139
BANNER LIFE
140
Female35Face amount $250,000SBLI
$145
BANNER LIFE
$150
MINNESOTA LIFE
$155
Female45Face amount $250,000SBLI
$273
GENWORTH FINANCIAL
$274
BANNER LIFE
$275

$500,000 20-Year Term Life Policy Quote

SEXAGE20YR TERM POLICYCOMPANY 1COMPANY 2COMPANY 3
MALE25$500,000 FACE AMOUNTAMERICAN GENERAL
$239
BANNER LIFE
$245
VOYA (FORMERLY ING)
$253
MALE35$500,000 FACE AMOUNTSBLI
$265
BANNER LIFE
$265
GENWORTH FINANCIAL
$284
MALE45$500,000 FACE AMOUNTSBLI
$615
BANNER LIFE
$615
GENWORTH FINANCIAL
$617
FEMALE25$500,000 FACE AMOUNTAMERICAN GENERAL
$209
SBLI
$215
BANNER LIFE
$215
FEMALE35$500,000 FACE AMOUNTSBLI
$230
AMERICAN GENERAL
$234
BANNER LIFE
$235
FEMALE45$500,000 FACE AMOUNTSBLI
$485
BANNER LIFE
$485
GENWORTH FINANCIAL
$296

$1,000,000 20-Year Term Life Policy Quote

SEXAGE20YR TERM POLICYCOMPANY 1COMPANY 2COMPANY 3
MALE25$1,000,000 FACE AMOUNTAMERICAN GENERAL
$414
BANNER LIFE
$425
SBLI
$440
MALE35$1,000,000 FACE AMOUNTSBLI
$450
BANNER LIFE
$455
NORTH AMERICA CO.
$485
MALE45$1,000,000 FACE AMOUNTBANNER LIFE
$1,155
SBLI
$1,160
GENWORTH FINANCIAL
$1,173
FEMALE25$1,000,000 FACE AMOUNTAMERICAN GENERAL
$354
SBLI
$360
BANNER LIFE
$365
FEMALE35$1,000,000 FACE AMOUNTSBLI
$390
AMERICAN GENERAL
$404
BANNER LIFE
$405
FEMALE45$1,000,000 FACE AMOUNTSBLI
$880
BANNER LIFE
$895
TRANSAMERICA
$930

In case you’re curious about how much a $1 million dollar term life insurance policy costs in other terms, follow the link to check out a post on my other blog.

Should You Consider a 10 or 30-Year Instead of a 20-Year Term Life?

Obviously, this all depends on your situation. I can think of one client who took out a 10-year term policy and then was forced to renew 10 years later.  She was so young that it would have been wise to do a 30-year term, but she settled for purchasing a 10-year policy.  She was lucky in the sense that even though she was 10 years older, the premium was almost the same.  If I were you, I would not bank on this strategy.

My buddy Phil from PT Money has the right thought process in buying his 20 year term policy.  Phil writes,

I plan to self-insure in the future. Twenty years from now I won’t need life insurance. I’m planning on having at least $500,000 of my own at that point. I’m taking serious steps with my retirement and short-term savings so that as soon as I’m able I can drop life insurance and rely on my own stash.

Many people that purchase 20-year terms do so with the same mindset.

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Why I Purchased a 30-Year Term Policy

Part of me knows that in 20 years I will be self-insured.  So why waste the money, right?  Good question.  I’ve asked myself the same thing and my conclusion comes with losing my father in his late 60s due to heart disease and Type II diabetes.

Although I’m in excellent health now, I always play the “what if” card.   And there’s some reassurance that from the ages of 54-64, my family will have that much more to take care of them if something happens to me.

Do I Need to Take a Medical Exam to Purchase 20 Year Term?

While yes, there are no medical exam term life insurance policies, it’s typically not suggested if you in good health.  The exam is very basic – just like going to your doctor’s office; expect the nurse comes to you!

Every time I’ve had a medical exam, a traveling nurse has either visited my house or office and it literally took less than 20 minutes.  It’s very simple and they are often willing to work around your schedule.  FYI, I prefer if they can come to my house in the mornings since you are usually required to fast and I don’t like going too long without eating something.

No medical exam plans are always available for purchase should you need coverage in short order. Though it should be known that you will need to stretch your budget more because your monthly cost will be higher than the normal term plans. If affordability is your goal its best to apply for a standard plan.

Additionally, your purchasing power is not as high as you would imagine.  Typically, the face value is capped at $25K for a nonmedical exam plan and you could leave yourself wanting more coverage which means buying two of these policies.

What Happens to My Policy After it Expires?

Good question. First things first.  If you are truly worried about it, then you might want to consider just buying a 30-term life insurance policy.

Yes, it will cost a bit more; but at least you’ll rest assured that you’re covered for another decade.  If you’re still dead set on a 20-year term insurance policy, then read on…

Typically, your insurance life insurance company will give you the choice to continue your policy on an “annual renewable basis”.  What does that mean?

That means that you can keep your policy in force by continuing to pay the premiums. I’m sure you’re wondering what the catch is.

The catch is that the annual premium is now determined based on your current age which means it will be much higher; not what you locked in 20 years ago.

The one positive thing about the “annual renewable basis” option is that you don’t have to get a new medical exam.

So if you’re in bad health, this might be a good option for you so as long as you can afford the premium.

Don’t Forget Your Beneficiaries

It seems it talking about life insurance, we are always focused on the insured.

But the reality is that the only reason we are taking out the policy is for our beneficiaries.

The first beneficiary that is always selected is your spouse. No question.

After that you name them, you’ll then want to list your children. While this all sounds basic – and it is – I’m amazed at how many people overlook this.

Another BIG mistake I see is when a divorce happens or a new child is born and the beneficiaries don’t get updated.

How to Get a 20 Year Term Life Insurance

If you want to get a twenty-year term life insurance quote for yourself, you don’t have to go too far.

Keep in mind the importance of getting life insurance coverage for your family.

No matter how long we think our lives will last being able to provide your family with financial security will last longer.

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About the Author

Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance book Soldier of Finance. He was a financial planner for 16+ years having founded, Alliance Wealth Management, a SEC Registered Investment Advisory firm, before selling it to focus on his passion - educating the masses on the importance of financial freedom through this blog, his podcast, and YouTube channel.


Jeff holds a Bachelors in Science in Finance and minor in Accounting from Southern Illinois University - Carbondale. In addition to his CFP® designation, he also earned the marks of AAMS® - Accredited Asset Management Specialist - and CRPC® - Chartered Retirement Planning Counselor.

While a practicing financial advisor, Jeff was named to Investopedia's distinguished list of Top 100 advisors (as high as #6) multiple times and CNBC's Digital Advisory Council.

Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.

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6 Comments

  1. Debbie April 23, 2013

    Hello Jeff, I currently have Northewestern Mutal 250,000 Whole Life 20 yr policy with the remaining 10 yrs left at 175.00 a mo. I should of thought at the time and so should of my agent that I am going to probably out live my policy and now at 58 prices are so much more expensive. Now what do you think my solution should be? Go with a new policy with the same companr and just do term for 250,000 or 500,000 and drop the whole life. The quote I am getting with them is 250,000 (104 mo) and 500,000 (198.00 a mo). What is your opinion

    Reply
    • Jeff Rose April 23, 2013

      @Debbie Really depends on what your objective is. Do you still feel you need that amount of life insurance coverage? Also, do you have any cash value built up on the whole life policy that you might be able to apply to a paid up permanent policy?

      Regarding your rates, use our free life insurance quoter to see how our prices compare to what your Northwestern rep is quoting you. Feel free to give our office a call, too!

      Reply
  2. Donal March 20, 2013

    I think one can go for both policies. He can start with a term policy and in the mid of that he can convert that into permanent policy. Like he took a term life insurance for 20 years at the age of 30. when the policy get complete then he will become 50. That time if he goes for any insurance policy then he can’t get a good policy because of his week physical state. So he can switch the policy after 10 years completion. That time he will be of 40. His physical state will also be good that time so it will be easy for him to switch.

    Reply
  3. denise February 18, 2013

    my question is if you get a 20 year term life policy and pass away before the 20 years if its a 500K policy do your beneficaries get only what you paid in? and if you pass away after the 20 years and dont renew do they still get the 500K? or do you have to renew it?

    Reply
    • Jeff Rose February 21, 2013

      @ Denise A 20 year term policy is good for 20 years so as long as you make the premium payment. So if you’re paying on for 15 years and something were to happen to you, your beneficiaries would receive the $500k.

      After 20 years the policy expires and you’ll then have the choice of renewing or converting it to a permanent policy. Keep in mind that it would then be based on your current health condition.

      Reply
  4. James March 5, 2012

    I got what you mean, thanks for sharing this. Thanks For Sharing info on a 20 Year Term Life Insurance Policy – Term Life Insurance.

    Reply

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