20-Year Term â€” Provides life insurance coverage for 20 years at an affordable cost. Starting in the 21st year, premiums increase or end altogether.
One of the most popular life insurance policies is the 20 year term life insurance policy. The purchaser of the policy usually pays a level premium for the first 10 years. In some cases the premiums remain level and at the same rate for the entire 20 year period, however, some companies increase the premiums starting in year 11 and they remain level for the balance of the 20 year term. The 20 year term life insurance policy earns no cash values and there, therefore, are no dividends.
This type of life insurance policy may be totally or partially converted to a permanent policy at any time during it’s lifetime without having to prove that you can qualify for it, that is without having to do a medical examination.
There are several uses for 20 year term insurance. You may use it to pay off a mortgage in the event of premature death. In this case…let us assume you have a mortgage balance of $100,000. You buy a policy for the entire $100,000. Let us assume you die years later when the balance owed is only $60,000. The insurance company pays off the mortgage and the $40,000 balance goes to your named beneficiary.
This is a good policy for a young family to start off with because it is fairly inexpensive. Young married people need to accumulate as much cash as possible as quickly as possible. They may need to save for an upcoming baby, or, may be, for the down payment on a house. They need an inexpensive life insurance policy for family protection. They can, thereafter, put their noses to the grindstone and save as much as they can in their bank accounts…with their aforementioned goals in mind.
Business people find this 20 year term policy very useful. You just started your business, you are reinvesting every dollar that you can put your hands on in your business. You need the least expensive life insurance to cover shareholders in the event of premature death. This 20 year term life insurance policy is ideal for the situation.