15-Year Term Life Insurance

By Richard Reich | Independent Life Insurance Broker | CA License #0832938 | 30+ years specializing in impaired risk and high-risk Llife Insurance placements, along with Disability Insurance and Annuities.

15-year term life insurance provides coverage for a fixed 15-year period at a locked-in premium. If the insured dies during the term, beneficiaries receive a tax-free death benefit. It’s a cost-effective option for covering specific, time-limited financial obligations like a mortgage or children’s education expenses.

Although 15-year term life insurance does not provide permanent coverage, it is an affordable solution for individuals and families who could be burdened with mortgage payments, college expenses, living expenses, and final expenses if a breadwinner should die unexpectedly.

Easy Article Navigation

• What is a 15 Year Term Life Insurance Policy?
• How does 15-Year Term Life Insurance Work?
• Benefits of a 15-Year Term Life Insurance policy
• Who Should Consider a 15-Year Term Life Insurance Policy?
• Frequently asked Questions

Term life insurance continues to be the most popular insurance product because of the low premiums compared to permanent insurance like whole life and universal life. Although most term policies are very similar, the length of the policy is the primary difference.

What is a 15 Year Term Life Insurance Policy?

A 15-year term life insurance policy is an excellent solution for short-term insurance coverage. When you compare the monthly premiums with whole life or universal life, a 15-year term policy can offer very affordable temporary coverage until the policyholder reaches an age when permanent insurance would be more appropriate because of the lifetime coverage that’s provided.

Moreover, since most term policies offer a conversion clause, the policyholder can convert all or some of the term coverage to permanent coverage without having to worry about their insurability.

For example, if an individual purchases a 15-year policy at age 45, they can easily convert the temporary coverage to permanent coverage at age 60 without having to worry about their health at the time of conversion.

And, many insurance companies will offer a premium credit against the permanent policy to help make the conversion transaction more affordable for the policyholder.

How does 15-Year Term Life Insurance Work?

With a 15-year term policy, the insured person will pay periodic premiums (monthly, quarterly, semi-annually, or annually) to the insurance company to keep the policy in force.

If the insured dies during the policy term, the beneficiary or beneficiaries listed on the policy would receive a lump-sum payment (tax-free) death benefit.

When the 15-year term is about to expire, the insured can typically elect to convert the policy to a permanent policy or choose to renew the policy on an annual basis.

What are the Benefits of a 15-Year Term Life Insurance Policy?

There are multiple benefits of owning a 15-year term policy beyond the ultra-affordable rates that most applicants can qualify for and utilize.

Large Death Benefit

Since the insurance company is only charging for the cost of insurance and an annual policy fee, applicants can purchase a larger death benefit that can easily cover the financial risks that need to be mitigated.

Optional Riders

Most insurance companies offer an assortment of riders that allow the applicant to broaden their insurance coverage and offer living benefits.

Coverage for Specific Debts

15-year term policies are also a good strategy for insuring specific debts such as a mortgage, vehicle loan, or other large purchase that is financed.

No Medical Exam

Although many companies require a medical exam, there are plenty of insurance companies that offer 15-year term plans without a medical exam requirement.

Conversion Option

The conversion privilege makes it easy for a policyholder who cannot afford permanent insurance to convert their policy to whole life or universal life down the road when their budget can accommodate the higher cost of cash value life insurance.

Who Should Consider a 15-Year Term Life Insurance Policy?

Although a 15-year term policy could be an appropriate purchase for just about anyone, there are certain situations when a 15-year term plan makes the most sense.

Starting a New Job

For individuals who cannot afford a permanent policy with a significant death benefit, the 15-year term policy can offer affordable bridge coverage until the cost of permanent insurance can fit within your budget. 

The Cost of Raising Children

For many young adults, the cost of raising children and paying education costs can be intimidating when you consider a breadwinner could die unexpectedly. A 15-year term policy could diminish those concerns considerably, knowing that if the worst thing happens, your children will not have to make sacrifices like a college education if you’re no longer in the picture. 

Mortgage Protection

For individuals and families whose mortgage is 15 years or less, exploring term life insurance options can provide an affordable strategy for leaving a paid-for home in the event of your death.

Empty Nesters

Once your children have graduated and left the household and your mortgage is almost paid in full, your financial risk will be considerably lower, and a 15-year term policy will act as a very affordable bridge into purchasing permanent life insurance for retirement. 

Will be Financially Independent in 15 Years

If you are a follower of Dave Ramsey and have developed a plan to be financially independent in 15-years, Dave Ramsey will recommend that you purchase affordable term life insurance while you are working on your plan to be financially independent. Your 15-year term policy will serve as a safety net if you should die unexpectedly before you and your family achieve financial independence. 

Satisfy a Divorce Decree

When married couples file for a divorce, often the judge will rule that the primary breadwinner provides a life insurance policy for the spouse and children until the children are no longer minors. A 15-year term policy will likely satisfy that requirement if the children are over 3 years old.

Business Continuation

If you own a business with a partner, a 15-year term policy can fund a buy-sell agreement or insure a key person in the business. If your partner or key person should die unexpectedly, the death benefit from the insurance policy you purchased on your partner or key person will help you maintain and operate your business without having to sell off assets to cover the additional expenses or buyout of your partner’s heirs. 

What Happens After a 15-Year Term Life Insurance Policy Expires?

When you purchase a 15-year term life insurance policy you will have multiple options when the policy expires.

1. You can renew – Typically, if you haven’t turned 70, you can renew your term policy for one year with the premium based on your attained age.
2. Convert Your Policy – If your policy has a conversion clause, you can convert all or some of your coverage to a permanent policy like whole life insurance or universal life insurance without the need for proving insurability.
3. Do Nothing – Your third choice is to do nothing and simply let the policy lapse and then purchase a new policy that will require medical underwriting and be rated based on your new age. 

Got a minute? Check out our article about 10 Year Term Life Insurance.