Is a 10-Year Term Life Insurance Policy Enough Coverage?

The quick answer? It depends on your situation.

You'll often hear that life insurance is prohibitively expensive. But if you buy the right kind of life insurance, you may realize how incorrect that statement is.

While whole life insurance can be very expensive, term life insurance tends to be far more affordable. Granted, there's a reason for that. Whole life insurance will cover you indefinitely, whereas term life insurance will expire after a certain period of time.

Whole life insurance policies also accumulate a cash value that you can cash out or borrow against as needed. With term life insurance, you get nothing if you don't pass away by the time your policy ends (other than, you know, being able to stay alive).

Many people who buy life insurance ultimately land on term life policies due to the difference in cost. And if you plan to do the same, you'll need to choose the right term for your coverage.

A lot of people put life insurance in place for 20 or 30 years. But do you need to go that route? Or is a 10-year term life insurance policy enough?

What protection are you trying to give your loved ones?

The goal of life insurance is to ensure that your loved ones have financial support in your absence. And the number of years of support you want to provide will dictate what type of term life policy to buy.

Let's say you're applying for a term life insurance policy when your oldest child is five years old and your youngest just turned three. It's fair to assume that children can support themselves financially once they graduate college and enter the working world, but for many, that doesn't happen until around age 22. And so in that case, it could pay to put a 20-year term life insurance policy in place. That way, if you were to pass away shortly after getting life insurance, your kids would still be supported until they become full-fledged adults.

But let's say your situation is different. Maybe you skipped out on getting life insurance when your kids were younger, and now, they're in their teens. In that case, a 10-year life insurance policy could suffice for your family.

Or maybe you don't have kids at all. Maybe you're married, your spouse has decided to retire in their 50s to care for an aging family member, and you want to make sure your spouse is covered until they're old enough to collect Social Security. In that case, a 10-year term policy could be more than enough for you, since seniors can start receiving Social Security as early as age 62.

Don't buy more life insurance than you need

If you're convinced you'll be giving your loved ones adequate protection with a 10-year term life insurance policy, then there's really no need to buy coverage beyond that point. The shorter the term of your policy, the less your premiums are apt to cost. And the less you spend on those, the more money you'll have to put toward retirement savings, your kids' college fund, and any other financial goals you have on your list.