Preparing financially after your demise is very important to secure your loved ones’ future especially when you are a primary wage earner of your family. A sufficient life insurance plan could make sure that your family has enough money after your death. 15 year term life insurance is one of the other types of life insurance plans.
Generally, term life insurance is available in different lengths and a 15-year plan is one of them. It is an obvious way to provide protection and replacement income if the policyholder dies within the policy period. It’s an affordable option that gives you peace of mind and you are secured as long as your policy is active.
In this blog post, we will explore what a 15 year life insurance policy is, how it works, what it covers, and many other things. We will also discuss the pros and cons of this insurance plan. Read out the blog to explore more!
What is a 15 Year Term Life Insurance?
A 15 Year Term Life Insurance plan offers coverage for a particular 15-year time frame, providing financial security to the insured during that time. In such a way, the policyholder gets temporary coverage for a limited period. Once the underwriting process is completed, the policy becomes effective for exactly 15 years.
However, the plan ends when its term expires, which makes it a suitable option for those who need short to medium-term insurance. However, the policyholder has the option of renewing his policy or buying some additional coverage to save his plan from expiring.
How does a 15 year level term life insurance plan work?
An insured purchased a 15 year level term life insurance policy has to pay monthly or annual premiums to keep his plan active. In case he dies during his plan term, his assigned beneficiaries will get a tax-free death benefit. That lump sum amount can be used to pay your final expenses, outstanding debts, or any other daily life expenses. However, if the term of the policy is up, it’s your choice to either extend it or let it expire.
Moreover, the premium you pay whether monthly or annually depends on several factors. Longer policies are expensive as they cover a greater amount of time. So if you want a midway for the duration as well as coverage cost, 15 year term life insurance is the best fit.
How much does a 15 year term life insurance cost?
Well! The cost of this plan depends on different factors. On average a term life insurance plan having coverage of $250,000 may cost you between $17 and $45 a month, based on your age. If you are a smoker, the policy will cost you something between $76 and $259 for a month. While those who have poor health have a monthly premium between $35 and $106 on average.
In case the insured has a high BMI, the cost would be $32 to $93. However, the cost may vary depending on your age and the coverage amount you choose, so it’s better to get a 15 year term life insurance quote.
Factors Affecting 15-Year Term Life Insurance Rates
What factors can affect your 15 year term life insurance rates?
Here are some of the factors on which 15 year term life insurance rates depend:
Age
Younger people generally get affordable life insurance quotes and plans as compared to older ones. This is because insurers consider them less risky.
Health Status
Insurance providers check out your health status via your height and weight, medical records, and the medical history of your family. If they find that you have or any chance of developing a health condition that can shorten your lifespan, it will affect your plan’s cost.
Gender
Research shows that females have a longer lifespan as compared to men. That’s why they have a perk of paying less for their term life insurance plan as they post less risk.
Lifestyle
Different lifestyle factors like smoking habits, criminal record, or having a risky professional also play an important role in determining your plan’s cost.
Benefits and Drawbacks of 15 Year Term Life Insurance Policy
Now let’s discuss some of the pros and cons of this insurance plan:
Pros of 15-Year Term Insurance
1- Affordable Policy
As the insurance plan comes with a relatively short time frame, it offers a higher death benefit as compared to many other long-term insurance plans even with the same cost.
2- Temporary Coverage
Do you only need coverage to pay off a home or auto loan or to pay the educational expenses of your child? A 15 year term life insurance plan could be the best option to give you temporary coverage.
3- Flexible Plan
In case your plan is going to end its term and you aren’t ready to end your coverage now, you still have options. Instead of expiring the plan, you can renew this plan or convert it to permanent insurance.
Cons of 15 Year Term Insurance
1- No Cash Value
Generally, term life insurance does not come with any cash value accumulation component and the same goes for 15 year term life insurance. On the other hand, permanent life insurance plans have this component that accumulates money over time from paid premiums.
2- A Medical Exam is required
The applicant can’t qualify for the plan if he doesn’t undergo a medical exam or test. He must meet all the medical requirements of the insurance company to qualify for term life insurance.
Are 15 Year Insurance policies right for you?
Whenever you have to buy term life insurance, always consider your financial obligations first. A 15 year term life insurance policy will be best fit for those who have some dependents on their income like a spouse or kids. It’s also beneficial if you are getting retired in a few years or have to pay a mortgage or loans.
You should consider buying this plan if your kids are young and you want insurance for their educational expenses. In case of your sudden demise, they won’t have to worry about their school or tuition fees. However, if you are still young getting this plan helps your parents to pay off your student loans and final expenses in case of your sudden death.
What happens after the 15-year term ends?
When you reach the end of your 15-year term policy, your plan will expire ultimately. However, before it expires, you have the option of extending it as well as converting it into permanent life insurance. On the other hand, you can also let it expire to buy a different one.
All these decisions will depend on your budget and circumstances. If you have any dependents in your house, depending on your income or you have some debts, extending your current policy would be advantageous. But if you are no longer dependent on other financial responsibilities, let your plan expire.
The Bottom Line
Ready to consider a 15 year term life insurance plan? Well! Before making any final decision, it’s better to get multiple quotes from various insurance providers. You can also contact a licensed insurance agent who will help you by assessing your needs and budget and suggesting the right policy for you.
Meet the mind behind our life insurance insights! With a finance background and hands-on experience, Khadija simplifies complex insurance plans for you. Trust our expert to guide you through policies, terms, and financial decisions with clear, concise, and easy-to-read content.