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.
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.
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
The Cost of Raising Children
Mortgage Protection
Empty Nesters
Will be Financially Independent if 15 Years
Satisfy a Divorce Decree
Business Continuation
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 |
|---|---|---|
| 25 | $14.76 | $12.98 |
| 30 | $14.76 | $13.50 |
| 35 | $16.92 | $14.86 |
| 40 | $23.74 | $20.51 |
| 45 | $39.06 | $29.03 |
| 50 | $58.89 | $44.63 |
| 55 | $99.93 | $66.75 |
| 60 | $151.29 | $107.70 |
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.
In my 20+ years as an independent life and disability insurance broker, I have personally assisted thousands of clients with their life and disability insurance needs. Being independent, I represent many highly-rated insurance companies and, because I am not beholden to any one insurance company, my focus is to find the right company and policy for each individual client. I believe that when people shop for insurance (or anything else, for that matter) on the Internet, they are looking for a simple, non-intrusive, non-pressure method of doing so. I strive to treat my prospective clients with the utmost respect and I believe an educated prospect can make the right decision without sales pressure. Please feel free to contact me at your convenience.