Co-Founder, Coastal Financial Partners Group, California
Term life insurance is available in a wide range of coverage periods. The more popular are 10, 15, 20 and 30 year term periods often featuring guaranteed level premiums during the full period and conversion provisions (to permanent coverage). You can find a few competitive one year term policies where the premium escalates annually. The guarantees are limited and the cost averages out over 10 years to be similar to 10 year level term.
Short term life insurance is generally thought of as term life insurance that comes in terms of 1, 5 or 10 years.
One year Term, or Annually Renewable Term, can be helpful for someone in between jobs or some other need for very short term coverage. However, one year Term will go up in price each year, and sometimes you need to re-qualify every year. So locking in a longer term is much easier and more cost effective if you need more than a couple years of coverage.
Five year Term is hard to find, and thus the prices are not as competitive as one would think. I have found that ten year Term rates often run as low or lower than five year Term. Since there is no penalty to drop Term life insurance, you may as well take the longer term and then just drop it if you don't need it the whole ten years.
Ten year Term policies are common and competitively priced. Again, if you need longer coverage, it can cost less to lock the rate in longer while you are younger and your health is good. But if you are going for short term coverage, 10 or 15 year Term can be a good way to go.
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One year Term, or Annually Renewable Term, can be helpful for someone in between jobs or some other need for very short term coverage. However, one year Term will go up in price each year, and sometimes you need to re-qualify every year. So locking in a longer term is much easier and more cost effective if you need more than a couple years of coverage.
Five year Term is hard to find, and thus the prices are not as competitive as one would think. I have found that ten year Term rates often run as low or lower than five year Term. Since there is no penalty to drop Term life insurance, you may as well take the longer term and then just drop it if you don't need it the whole ten years.
Ten year Term policies are common and competitively priced. Again, if you need longer coverage, it can cost less to lock the rate in longer while you are younger and your health is good. But if you are going for short term coverage, 10 or 15 year Term can be a good way to go.