What is a 15-year term life insurance policy and how does it work?
What is a 15-year term life insurance policy? A 15-year term life insurance policy offers coverage for a set period of 15 years, starting from the date the policy is issued. after which the policy transitions to an annually renewable plan, allowing you to either renew the coverage or convert it to a permanent policy. However, it does not accumulate cash value.
15-year term life insurance plans are a flexible and affordable way to ensure financial protection for your loved ones if anything happens to you during the coverage period.
What is 15-year term life insurance?
15-year term life insurance is an affordable way to ensure that your loved ones have financial security if you pass away during the coverage period. The policy provides a fixed amount of coverage for a duration of 15 years.
Key Features:
- Fixed premiums: Your term life insurance premiums will be the same throughout the 15-year duration of your policy. This predictability offers peace of mind when budgeting, with no surprise increases or “junk fees”.
- Guaranteed coverage: Death benefits are guaranteed to your beneficiaries should your death occur during the 15-year coverage period.
- Affordability: Term life insurance is generally more affordable than whole life insurance. While term life insurance premiums increase upon renewal, 15-year policies offer lower premiums than longer-term policies while assuring that your loved ones have financial security during the coverage period.
- Flexibility: When your 15-year term life policy terminates, you can renew your policy, find a new policy, or convert to whole life insurance in some cases. You are not locked into a long-term commitment for several decades.
A 15-year term life insurance policy is ideal for individuals undergoing major life changes, such as planning for retirement or a major increase in income. If you are young and healthy now but are unsure what the future holds, 15-year term life insurance is more affordable than committing to whole life insurance upfront while providing you the flexibility to convert to a permanent policy after the initial 15-year term.
What happens after a 15-year term life policy ends?
After your initial 15-year term ends, your life insurance policy becomes renewable annually with premiums based on your age. If you choose to continue coverage, you’ll receive a bill for the updated premium at the end of the term. It’s reasonable to expect that your coverage needs will change in the 15 years since you began your policy, so you should reassess your personal and professional situations when the end of the term approaches.
Here are your options when the policy ends:
- Renew: You can renew a term life insurance policy in most cases. However, since age and health are major determinants for the premiums, you can expect to pay higher premiums upon renewal.
- Convert: Your term life policy may have an option to convert to a whole life policy without needing a medical exam. This type of policy does accumulate cash value over time, and in most cases you have until the age of 70 to convert.
- Purchase a new policy: Your age, location, family status, career, and other aspects of your life may be completely different when your 15-year term life insurance policy terminates compared to when you took it out. In your final months of coverage start ticking, you should use this time to consider new life insurance plans that offer different terms and coverage amounts that may suit your needs better.
Who should get a 15-year term life insurance policy?
A 15-year term life insurance policy is a robust way to provide affordable and flexible financial protection for your family in case of unforeseen events. 15-year term life policies are often the most suitable for the following demographics:
Parents of Older Children and/or Experiencing an Income Increase
- Parents of teenagers: Most teens and young adults need time to become self-sufficient after they complete high school. 15-year term life insurance ensures that your older dependents have assets they can access for education, housing, and other necessities until they can support themselves.
- Multiple children in college: Parents with more than one child in college often worry about having sufficient coverage if one child is about to graduate college just as another one starts. A 15-year term life insurance policy ensures that parents have thorough coverage to get multiple children through higher education on different timelines.
- Increase in household income: Parents and guardians can have more surety for their short-term needs with a 15-year term life insurance policy upon experiencing a major increase in income. As you save and invest for your future and build a legacy for your loved ones, 15-year term life insurance is an affordable way to protect your dependents as you amass other assets they can access while you are alive.
Older Adults in Need of Coverage Until Retirement
- Affordable and flexible coverage for older workers: Older adults who expect to retire in the next 10-15 years can obtain affordable coverage with a 15-year term life insurance policy.
- Coverage for changes later in life: One’s financial situation, familial obligations, and other aspects of their life can dramatically change when leaving the workforce and starting retirement. A 15-year term life insurance policy is an affordable way to protect your loved ones while saving as much as possible pre-retirement.
Mortgage Protection
- Coverage matching home loan terms: When your life insurance policy matches the term of your home loan, it provides your loved ones security that the loan can be paid off in case of an untimely event that occurs before the end of the loan’s term.
- Term life insurance vs. mortgage life insurance: A 15-year term life insurance policy is a more favorable option than a mortgage life insurance policy for ensuring that your home is paid off upon your death. If you take one out when you originate a 15-year mortgage, the policy is not contingent upon you being a homeowner so your loved ones are still protected for the duration of the policy if you sell or foreclose. Your beneficiaries will also receive the death benefits, not the bank.
- Complement to mortgage life insurance: 15-year term life insurance is an excellent complement to mortgage life insurance by ensuring your home is paid off and your beneficiaries can use death benefits for other purposes, like paying off credit cards, education expenses, funeral expenses, and more.
Life Shifts Requiring Changes in Insurance
- Divorce: Divorce can be a financially fraught time that also leaves you unsure of your coverage needs. 15-year term life insurance can ensure that you are able to satisfy court-ordered payments and child support in the event of your death, without making the commitment required for whole life insurance.
- Career changes: Career changes can be exciting, but also financially risky. 15-year term life insurance ensures that your beneficiaries can pay off any entrepreneurial debt you leave behind, or simply have financial security if a new career path doesn’t work out.
Explore 15-year term life insurance policies from SBLI
Life insurance provides peace of mind that your loved ones will have a financial safety net when you are gone. Our 15-year term life insurance policies offer affordable and flexible protection that fits your coverage needs at different stages of your life.
Ready to get started? Get your term life insurance quote today, and you can also speak to one of our licensed agents by calling 800-650-4391.
SBLI Term Life Insurance policy form series B-56.
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