top of page
  • Writer's pictureWing Chan

Everything You Need to Know About 15-Year Term Life Insurance

Updated: Oct 10, 2023

Term life insurance is one of the most popular types of life insurance on the market today, which means you can expect a lot of options from a lot of different insurance carriers. While having many options may be overwhelming, its ultimately a good thing, because it means that you have the opportunity to find a policy thats ideally suited for your personal and financial situation. 15-year term life insurance is one of the more popular term policy options. It provides more security than 5- and 10-year policies, without the long commitment of 20- and 30-year policies. In this article, well discuss 15-year term life insurance at length: what is it, who is it best for, how much does it cost, and more. If youre considering purchasing term life insurance, read on to find out if a 15-year policy is the right choice for you.

What is Term Life Insurance? Term life insurance is a type of life insurance that lasts for a specific period of time, or term. Its usually sold in increments of 5, so you can buy a 5-year, 10-year, 15-year, 20-year policy, etc (temporary coverage). Term life insurance is also known as pure life insurance because its only feature is the death benefit that gets paid out to your beneficiaries should you die during the term. This is inherently different from permanent life insurance, which offers a death benefit, an investment component, and lasts your entire lifetime (permanent coverage). To apply for term life insurance, you need to fill out a questionnaire that includes several detailed health questions. Additionally, youll be required to undergo a medical exam (which is covered by the life insurance company). The purpose of the life insurance medical exam is for the companys underwriters to get a sense of your health conditions. This helps them calculate how much you should pay in monthly premiums. Underwriters compare the results of your exam against millions of statistics to determine your statistical life expectancy. They then calculate your life insurance rates based on that information. The general rule of thumb is that the healthier you are, the lower your rates will be. The life insurance medical exam usually takes 20 to 30 minutes and can be scheduled at the location of your choosing. Its a prerequisite to qualify for term life insurance, so insurance companies try to make it as convenient as possible. People who dont want to undergo a medical exam, or who are afraid that theyre in such bad health that theyll get rejected by the insurance company, can choose no exam life insurance (discussed at length toward the end of the article). No exam life insurance is available as both term and whole life insurance, and you can qualify for coverage without undergoing a medical exam.

Why Do People Choose Term Life Insurance? The main reason people buy any type of life insurance is to provide financial protection to their loved ones in case they die. Its hard enough dealing with the loss of a loved one, but dealing with financial complications can make the situation even worse. When it comes to term life insurance, as opposed to permanent, simplicity and affordability are two of the main benefits. Term life insurance is much more simple and straightforward than permanent since it doesnt have an investment component. As for cost, term life insurance is usually much more affordable than permanent life insurance because it doesnt come with an investment component and doesnt last your entire lifetime. While term life insurance is less expensive than permanent life insurance, it requires a good measure of forward-thinking to ensure that it lasts for the amount of time that you need. In other words, term life insurance is designed to get you (and your loved ones) past a certain point. Its up to you to calculate how many years it will take until you reach that point. For example, many young parents want life insurance so that, if they die early, their children will still be able to pay for college or weddings. This requires parents to do some calculations: how many more years until their youngest child reaches college-age? How much will college cost then? By asking the right questions (and getting the right answers), parents can figure out how long of a term they need and how much coverage. Another example: Many new homeowners buy term life insurance to prevent the debt of their mortgage from being passed on to their loved ones in case they die before the mortgage is paid off. So if you get a 15-year mortgage, youll want a 15-year term life insurance policy (at least) to ensure that your loved ones dont get saddled with your unpaid debt.

What is a 15-Year Term Life Insurance Policy? A 15-year term life insurance policy is exactly what it sounds like: term life insurance that lasts for 15 years. Like other term policies, 15-year life insurance has level premiums and a guaranteed death benefit for the duration of the term. Its important to note that your policy will only be valid if you consistently pay the monthly premiums. Also, the information you enter on your life insurance application must be honest and accurate. If its not, the insurer has the right to contest the death benefit should it be claimed within a certain period of time. If the insurer finds out that you didnt provide accurate information on the application, your beneficiaries may not receive the death benefitand that defeats the entire purpose of life insurance. Many insurance carriers offer 15-year term life insurance, which means that, as the consumer, you have the advantage. You dont need to jump on the first policy you findyou can check what else is out there and get the best rates possible. Sproutt has a terrific instant quote calculator that allows you to compare quotes.

Advantages of a 15-Year Term Policy Like all term life insurance, a 15-year policy ensures that your loved ones will receive a death benefit if you die during the duration of the term. But a 15-year policy has the advantage of being more affordable than 20- and 30-year term policies. At the same time, it lasts longer than 5- and 10-year policies, which also have low premiums, but may simply not be long enough for your needs. Other benefits of 15-year life insurance include:

  1. Peace of mind for both the policyholder and the beneficiaries

  2. Essential years and periods of life can be covered at affordable rates

  3. The death benefit can be paid out in one lump sum or in staggered payments

  4. Shorter commitment period than policies with longer terms Some people who buy 15-year term life insurance choose to convert it to a whole policy when the term ends. This is a sound strategy for young adults who ultimately want whole life insurance, but cant afford it at their current stage in life. A 15-year policy provides coverage during an important life period, during which you will hopefully scale up in your career and make more money. By the time the policy ends, the hope is that youll be able to afford whole life insurance.

Who Needs a 15-Year Term Policy? 15 years might seem like a short amount of time, but it can actually be an ideal term in many situations. 15-year term life insurance is great if you:

  1. Are nearing retirement age: A 15-year policy can bridge the gap between your final years of work and the start of your retirement. For example, if you buy a 25-year policy at age 30, it will expire at age 55. Youll then have about 15 years until you reach retirement age. If you have loved ones who are dependent on you for income, a 15-year policy can cover them during that period of time.

  2. Have a 15-year mortgage or another long-term loan: A 15-year life insurance policy can provide financial protection for your loved ones. It ensures that they wont have to take on your debt if you die before the mortgage is paid off.

  3. Have kids who will finish college within 15 years: A 15-year policy can ensure that your children can pay for college if you die before they reach that stage.

  4. Are young and cant afford to pay a lot in premiums: A 15-year policy is much more affordable than a longer-term policy, and it can give you the protection you need as you scale your career, buy your first home, or start sending your children to school. Also, its very important to have some type of coverage in place if you have student debt.

How Much Does a 15-Year Term Life Insurance Policy Cost? The cost of life insurance depends on many factors, as well discuss below. Using our instant quote calculator, you can get an average of what you can expect to pay for 15-year life insurance at your age.

Here are some sample rates: As you can see, if you wait until age 55 to get life insurance, your rates will jump significantly. The general rule of thumb is, the younger you are when you buy life insurance, the lower your rates will be. You can read more about average life insurance rates by age here.

What Factors Affect the Cost/Rates of Life Insurance? Usually, when you apply for life insurance, it takes between 3 to 6 weeks to get an answer from the insurance company. This is because underwriters must take many details into account when determining whether you qualify and, if so, how much you should pay in monthly premiums. Factors that affect the cost of life insurance include:

  1. Age: The younger you are, the lower your premiums will be.

  2. Gender: Statistically, women live longer than men, so they are given lower rates across the board.

  3. Location: Life insurance rates are lower in certain states. For example, New Jersey has lower rates than New York.

  4. Health: Life insurance underwriters pore over every detail of your health to determine your statistical life expectancy. That figure is used to calculate how much you need to pay in monthly premiums. Underwriters get your health details from your life insurance application, the medical exam you undergo, as well as from third-party sources like pharmacy databases, medical records, and more.

  5. Smoking status: Since smoking greatly decreases life expectancy, smokers are given higher rates than non-smokers across the board. Life insurance companies actually have completely separate rates categories for smokers.

  6. Lifestyle: Are you active, do you get enough sleep, do you drink alcohol or do drugs? Do you have any DUIs? Underwriters consider all of these things when calculating your life insurance rates.

  7. Type of policy (term, permanent, no exam): Term life insurance is usually the most affordable type of life insurance policy. Permanent and no exam are also viable options, but they are more expensive.

  8. Length of term: The longer your term, the more expensive your monthly premiums will be.

  9. Coverage amount: The higher your amount of coverage, the higher your monthly premiums will be.

  10. Additional riders: Riders are add-ons that you can choose to attach to your policy. While they offer useful benefits, they also raise the cost of your policy. Popular riders include Disability, Accelerated Benefit, Long-Term Care, and Waiver of Premium. With a standard 15-year term life insurance policy, health plays a vital role in determining how much you need to pay in monthly premiums. If youre in excellent health, theres no reason to avoid a medical exam. If youre not in great shape, you may want to choose no exam life insurance, as health plays a much less significant role in the approval process. For some no exam policies called guaranteed issue, health isnt considered at allin fact, these policies dont involve any underwriting, which makes them ideal for people with serious health issues. Other no exam policies, known as simplified issue, involve a limited amount of underwriting and also offer easier approval than traditional term policies. Both of these options offer much faster approval since there is little to no underwriting involved. Even when dealing with just one type of term policy15-year life insurancethere are many options on the table. If you need help deciding which policy is right for you, contact the insurance advisors at Sproutt.

24 views0 comments


bottom of page