The rules of life insurance are clear to veteran life insurance agents, but life insurance education for the average person is usually limited.
As a result, we set out to inform the public and demystify life insurance.
One of the most common questions that we get is regarding the length of coverage or the difference between term and whole life.
What is a 10-year life insurance policy? A 10-year life insurance policy has a level premium for 10 years. Your life insurance rates are locked in for 10 years of death benefit coverage. At the end of the 10-year term, your rates can go up.
A 10-year life insurance policy is usually the lowest term period of life insurance coverage that you can purchase and is typically designed for temporary insurance needs of 10 years or less.
The rates for 10-year life insurance policies are usually very affordable.
Compare the rates of 10-year life insurance with our free rate comparison tool that showcases the rates of the best life insurance companies in the United States.
Our article will cover the following 10-year life insurance topics, so feel free to skip ahead if a topic catches your eye.
- How Does a 10-year Life Insurance Policy Work?
- What Happens to My Life Insurance After 10 Years?
- How Do I Get a 10-Year Life Insurance?
- Final Thoughts on 10-Year Life Insurance Policies
How Does a 10-year Life Insurance Policy Work?
A 10-year life insurance policy is also called a 10-year term policy.
10-year term life insurance is pure insurance that has no cash surrender value.
Term life insurance is the most cost-effective type of life insurance typically used for temporary insurance needs like mortgage protection life insurance.
During the first 10 years of your level term life insurance policy, your rate and death benefit is locked in.
Simply put, your rate cannot go up, and your death benefits cannot go down.
10-year term policies usually make sense for clients who only need coverage for 10 years or less.
An example would be a 10-year SBA loan that needs to be secured by a life insurance death benefit.
A 10-year life insurance policy will protect the loan balance during the 10-year repayment period.
You wouldn’t buy a 15-year or 20-year life insurance since you’d be paying for years of coverage that you didn’t need.
What Happens to My Life Insurance After 10 Years?
After the first 10 years of your level term period is up, you need to make a decision on what you want to do.
You usually have three options:
- Renew your coverage annually (the price will go up)
- Use a conversion option (if available)
- Cancel your life insurance
- Replace with a new life insurance policy.
Renew Your Coverage Annually
If you decide to renew your life insurance annually, this is known as the annually renewable term period.
Most term life insurance will allow you to renew your life insurance yearly after your level term period is complete.
However, all bets are off once the level term period ends.
The life insurance company will commonly raise your rate every year that you keep the coverage with it ending around age 95.
In some contracts, the life insurance company may also lower your death benefits as well.
The reality is that few people usually will keep this option for very long, but it can be good in a pinch for a few years.
Convert Your Life Insurance
Most life insurance policies have a conversion option located in the policy that allows you to exchange your term life insurance with permanent life insurance.
The big advantage of a term conversion is that you do not have to go through the medical underwriting again.
It is not always possible to get life insurance with a pre-existing condition.
If your health changed for the worse during the 10-year level term period, it a term conversion maybe your best option.
Just make sure that your conversion option is still available.
Some term policies don’t have conversion options, or they expire before the level term period does.
Cancel Your 10-year Life Insurance
Most people purchase 10-year life insurance for a reason, and simply don’t need life insurance coverage after 10 years.
While a 10-year term life insurance policy protects you during the 10-year level term period, you can cancel your coverage at any time you want.
There is no penalty to cancel your life insurance policy.
You would contact the insurance company in writing, notifying them of your decision to surrender your life insurance policy.
Some insurance companies may have a specific form that you need to sign.
How Do I Get a 10-Year Life Insurance?
The best way to get a 10-year life insurance policy is to work with an independent broker.
Not every life insurance company will have the same opinions on rates and underwriting.
Independent life insurance brokers work with many companies to get you the best deal that they can.
Most 10-year life insurance policies will require full underwriting, which includes a medical exam and your recent medical history.
However, you may also qualify for life insurance without the hassle of a medical exam.
Our agency works with the best no-exam life insurance companies for 10-year terms.
Many of the 10-year no-exam life insurance policies include living benefits for critical and chronic illnesses.
Living benefits pay you a lump-sum of cash as an advancement of the death benefit if contract a hard-hitting condition like a major heart attack.
Final Thoughts on 10-Year Life Insurance Policies
A 10-year life insurance policy can save you a lot of money if you only need life insurance coverage for a short period of time.
During the first 10 years of your 10-year life insurance policy, your premiums cannot go up, and your death benefits cannot be lowered.
This is known as level term life insurance since the premiums remain level for the term you select.
At the end of your 10-year period, you have a few options.
If you no longer need the life insurance coverage, you can always drop your policy.
You can annually renew your life insurance, but the rate may increase, and your death benefits may be lowered.
If you’re in good health, you can try to replace the policy with new life insurance or try to convert the policy to whole life or universal life insurance.
Replacing the policy may be the most cost-effective option if you need the same amount of coverage and our in good health.
Take a look at the rates of over 50 high-quality life insurance companies using our free rate comparison tool.
Thank you for reading our article on 10-year life insurance.
Please contact us with any questions.