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Term life insurance is the simplest form of life insurance: you pay premiums for a specific period, and if you die during that time, your beneficiaries receive the death benefit. No cash value, no complexity—just straightforward protection when your family needs it most.
For people entering retirement, term life can provide affordable coverage for temporary needs like paying off a mortgage, replacing income until your spouse reaches full retirement age, or protecting your family while building other assets.
You select a coverage amount (death benefit) and a term length. Pay level premiums for the duration of the term. If you die during the term, beneficiaries receive the full death benefit tax-free. If you outlive the term, coverage ends.
Available Term Lengths:
Coverage Amounts: $50,000 to $5 million depending on age, health, and insurer.
Premium Structure: Fixed premiums remain the same throughout the entire term, making budgeting predictable.
Mortgage Protection: You have 12 years left on your $200,000 mortgage. A 15-year, $200,000 term policy ensures the house is paid off if you die before the loan is satisfied.
Bridge to Full Retirement: Your spouse is 58, you're 65. A 10-year term provides income replacement until your spouse reaches full retirement age and maximizes Social Security benefits.
Temporary Debt Coverage: You have business obligations or loans that will be resolved within 10-15 years. Term coverage protects against these temporary liabilities.
Asset Building Period: You're building retirement savings but need protection now. Term bridges the gap until your accounts reach levels where your spouse would be financially secure.
Cost-Effective High Coverage: You need $500,000 protection but have a limited budget. Term provides maximum coverage for minimum premium.
Premiums increase with age due to higher mortality risk. Here are typical 2026 costs for healthy 65-year-olds:
10-Year Term:
15-Year Term:
20-Year Term:
Cost Factors: Health classification, gender (women pay less), tobacco use, and specific insurer all affect premiums.
Modern term policies include living benefits riders allowing early access to death benefits under specific circumstances.
Terminal Illness: Diagnosed with 12-24 months to live. Access 50-100% of death benefit for medical care, travel, or end-of-life expenses.
Chronic Illness: Unable to perform 2 of 6 daily activities (bathing, dressing, eating, toileting, transferring, continence). Access benefits to pay for long-term care.
Critical Illness: Some policies allow accelerated benefits for heart attack, stroke, or cancer diagnosis.
How It Works: Request accelerated benefit. Insurance company advances portion of death benefit (typically 50-90%). Use money as needed. Death benefit reduced by amount advanced. Beneficiaries receive remaining benefit upon death.
Cost: Many insurers include basic living benefits at no charge. Enhanced versions may add $1-2 per $1,000 of coverage monthly.
Many term policies include conversion rights—the ability to convert to permanent insurance without medical underwriting.
Why This Matters: If your health deteriorates during the term, you might not qualify for new coverage. Conversion rights let you get permanent insurance regardless of current health.
Typical Conversion Rules:
Strategic Use: Buy term coverage now while healthy. If health declines or you later need permanent coverage, convert without medical underwriting. If you stay healthy, let term expire or apply for new coverage at better rates.
Important: Not all term policies include conversion rights. If you think you might want permanent coverage later, choose a policy with this feature.
Option 1: Let Coverage Lapse If you no longer need life insurance, stop paying premiums and let coverage end. Most common choice when mortgage is paid off or spouse is financially secure.
Option 2: Renew Annually Many policies allow annual renewable term after the initial period ends. Warning: Renewal premiums are typically 5-10 times higher due to increased age.
Example: Your 10-year term at $150/month ends at age 75. Annual renewal might cost $750-1,500/month.
Option 3: Convert to Permanent If within conversion period, convert to whole or universal life without medical underwriting. Premiums based on age 75 (current age), not age 65 (original application age).
Option 4: Apply for New Coverage If health remains good, apply for new term or permanent policy. Premiums based on current age but may be competitive if you've maintained good health.
Return of premium term returns all premiums if you outlive the term. Premiums are 30-50% higher. If you survive, get 100% back. If you die during term, beneficiaries receive death benefit (premiums not returned). Best for people who dislike "wasting" premiums. Trade-off: higher cost and opportunity cost of investing the difference.
Expect full underwriting: health questionnaire, medical records review, paramedical exam, blood/urine tests, sometimes EKG. Timeline: 4-8 weeks. Key factors: blood pressure, cholesterol, diabetes management, heart/cancer history, BMI, tobacco use.
Term life insurance provides affordable, straightforward protection for temporary needs. It's ideal for covering mortgages, replacing income during transition periods, or protecting your family while building assets. At age 65, 10-year terms remain reasonably priced and address most temporary protection needs.
At A&E Insurance Agency, we help you determine the right term length and coverage amount based on your specific obligations and timeline. We'll compare rates from multiple carriers, explain living benefits and conversion options, and help you decide between fully underwritten and simplified issue policies. Schedule a free consultation to explore your term life insurance options.
