If you are looking for a short-term life insurance policy, 10-year term life insurance could be a consideration. It's one of the least expensive policy types on the market, and the premiums will stay the same for the entire length of the term.
After 10 years, however, the policy will expire. At that point, depending on your health, you could purchase another policy to continue your life insurance coverage. There are other term policies available in 15-, 20- and 30-year lengths, putting 10-year term life on the short end of the term life insurance spectrum.
When Could a 10-Year Term Life Policy Be Suitable?
There are a number of scenarios where a 10-year term policy length could be a good option. If you are someone in your 50s or 60s who would like additional insurance coverage until you reach the end of your career, a 10-year term policy could help you meet this goal and may be less expensive than longer-term policies.
It could also be a good addition if you already have some life insurance but want to increase the coverage amount. Tanya bought a 30-year term policy when her daughter was born a decade ago, but has just received a significant pay raise and would like more coverage. She could add a 10-year term policy to her existing insurance portfolio to give her additional coverage until her daughter moves away from home.
It could also be a smart choice if your insurance needs might change later on. Since you may be paying less than with other policy lengths, it could also be less expensive to convert your policy before it expires.
Steve is at the beginning of his career and is interested in buying whole life insurance. Currently, he can't afford the premiums for a permanent life insurance policy. However, he buys a 10-year term policy with a conversion rider. This could let him switch to a permanent policy someday without taking a medical exam. He purchased coverage now and could convert to a whole life policy in a few years when he has a higher income.
When Could a 10-Year Term Life Policy Be Less Suitable?
A 10-year term policy might not work as well for long-term goals like providing financial protection for young children. If you buy a 10-year policy right when you have your first child, that policy will expire well before they grow up.
It might also not be the best choice when you're in your 30s or 40s and are looking for an additional policy to last your entire career. You'll likely work longer than 10 years, and your policy would expire before you head to retirement.
If you apply for a new policy after your 10-year term expires, the premiums might become more expensive — and you might have trouble qualifying if you have developed health issues. If you're looking for coverage that will last your entire career, you might consider locking in longer-term coverage with a 20- or 30-year policy instead.
Any Other Life Insurance Considerations?
If you buy a 10-year term life policy and think you might want coverage later on, you could always see if it's possible to add a conversion or guaranteed renewability rider. These extra features could let you extend your coverage in the future without taking a medical exam.
Conversion lets you switch your term policy into permanent coverage that can last your entire life, while a guaranteed renewable rider lets you extend your term policy for another term. This could give you the option of longer-term coverage, even if you have a short-term policy.
It could also be worth reviewing your policy with an insurance professional before making a decision. Such a professional could help you figure out whether a 10-year term policy is right for your needs.