Term life insurance comes in quite a lot of forms, and 25 year term life insurance is no different.
The most common types of term life are 20-year and 30-year, but as consumers needs persistently change, more and more carriers are adopting new policies.
A 25 year term life insurance product can fit a few different situations, and for some middle-aged buyers, represents a huge opportunity.
Today’s discussion breaks down this type of policy, and presents a few unique ways to use it.
25 Year Term Life Insurance Policy
Term life insurance is used to cover a lot of different financial obligations:
- Business Loans
- Income Replacement
- Final Needs
When it’s purchased, it should be purchased for a specific reason, and the duration should match the obligation. It’s common for a person to purchase a 30-year mortgage to keep payments as low as possible, and a 30 year term life insurance policy fits it quite nicely.
So, where does a 25 year term life insurance policy fit?
While it covers the same sort of needs mentioned above, there are some special uses for this duration of term life insurance.
The 59 Year Old
What does a person who is 59 years old have to do with a 25 year term life insurance policy? It might be the last year he could purchase a 25 year term policy!
When a term policy is applied for, the carrier offering the coverage won’t likely cover the insured with a term duration going beyond what their life expectancy is. This would create too much risk. Instead, the duration of the policy can usually go up to that age.
A 59 year old male today may have a life expectancy of age 84. If this is the case, it’s exactly 25 years from now. Once the male turns 60, he would be ineligible for a 25 year term life insurance policy, and would have to resort to a 20 year term policy, which would only cover him to age 80.
By waiting that extra year and having to buy a shorter term, he is missing coverage on 4 very vital years of his life.
If you’ve found yourself in this type of situation, you can still go ahead and opt for the 20 year term, but if you still want coverage beyond age 80, you’ll have to look into a universal term product, like a Term To 90 or guaranteed universal life insurance product.
You always have options for coverage to any age, as long as you can qualify, but the price is the greatest deterrent to these policies. Keep this in mind.
The 40 Year Old
Any guesses on the 40 year old and why they might need a 25 year term life insurance policy?
If you guessed something with age 65, you’d be right.
Not only is age 65 a very common age for someone to retire, but it’s also key age for many other insurance type of benefits or social security. The reason someone might seek insurance at 40 is to cover their spouse for the next 25 years, should an untimely death occur.
In the event of death between age 40 and retirement, the spouse would be missing out on critical income not only to pay bills, but to save up for the retirement nest egg. A person buying a 25 year term life insurance contract would be hedging the remaining working years until a social security benefit could be fully utilized.
25 Year Debts
As mentioned, matching a 25 year term life insurance policy to a debt lasting 25 years would also be a perfect fit.
While it’s difficult to project exactly how long all debts could last, given variable interest rates and inconsistent payments, quite a lot of student loans can take 25 years to pay back if they are sizable.
If a parent has co-signed on a student loan, it might be a very wise choice to own life insurance on the full amount of the graduated student, for as long as it may take to pay back the loans. Buying a 25 year term policy will keep the premiums level throughout the payback.
You might be thinking, well, won’t the loan amount be going down over this time period? Absolutely. In this case, you can contact the insurance company and lower the death benefit amount on the 25 year term life policy to match the most current amount. This not only lowers the required payments, but also still keeps those new payments level.
If you have a situation which might require a 25 year term life insurance policy, please feel free to contact us and we’ll be happy to search through our 50+ carriers to find you the most affordable policy available.
Maybe you are needing insurance but concerned about qualifying due to a medical condition such as someone needing life insurance for overweight individuals; we can answer your questions and help you obtain the coverage you deserve. Call us today.