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?
- How much does a 15-Year Term Life Insurance Policy Cost?
- 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.
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.
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.
Most insurance companies offer an assortment of riders that allow the applicant to broaden their insurance coverage and offer living benefits.
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.
Although many companies require a medical exam, there are plenty of insurance companies that offer 15-year term plans without a medical exam requirement.
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.
For individuals and families whose mortgage is 15 years or less, a 15-year term life insurance policy is an affordable strategy for leaving a paid-for home in the event of your death.
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 if 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 achieves 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.
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.
How much does a 15-Year Term Life Insurance Policy Cost?
If you are healthy and a non-smoker, a 15-year term policy can be super affordable. In fact, the rate chart below will indicate how a 15-year term policy can cost less per month than a meal for your family at a fast-food restaurant.
Here are actual rates for a $500,000 15-year term life insurance policy for a healthy male and female non-smoker:
|Age of Applicant||Male Non-Smoker||Female Non-Smoker|
The rates listed above are for no medical exam term life insurance and are subject to underwriting.
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.
- 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.
- 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.
- 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 rated based on your new age.
Frequently asked Questions
Question: How does 15-year term life insurance compare with whole life insurance?
Answer: A 15-year term life insurance has much lower rates than a whole life insurance policy because the insured is only paying for the actual cost of insurance and annual policy fees. With whole life insurance, a portion of the premium is diverted to the cash value account where it will earn tax-differed interest according to the policy contract.
Question: Does a 15-year term life insurance premium increase every year?
Answer: The premium for a 15-year term life insurance policy generally remains level for the entire term of the insurance policy.
Question: Do I have to take a medical exam to get a 15-year term life insurance policy?
Answer: Many insurance companies offer no medical exam term life insurance. In most cases, a non-medical exam policy costs a little more than a fully underwritten policy.
For more information about 15-Year Term Life insurance and to see if it is the best fit for you, call the insurance professionals at LifeInsure.com at (866) 868-0099 during normal business hours or contact us through our website.
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