Life Insurance

What Is 20-Year Term Life Insurance?



When purchasing life insurance, you might consider a 20-year term life insurance policy if you want affordable coverage that locks in your rate for the next two decades, even if your health changes.

What Is 20-Year Term Life Insurance?

A 20-year term life insurance policy guarantees that you lock in a rate for 20 years. You pay a level premium, and if you pass away while your coverage is in force, your beneficiaries receive a death benefit.

There’s no cash value component with term life insurance as there is with types of permanent life insurance. However, term life is generally the cheapest type of life insurance to buy.

How Does a 20-Year Term Life Insurance Policy Work?

When you buy a 20-year life insurance policy, you will select a:

  • Coverage amount, also known as the death benefit.
  • Beneficiary, or beneficiaries, who will receive the death benefit.

Your beneficiaries can use the death benefit to cover any expenses if you die, including funeral and burial costs, education expenses, everyday bills or outstanding debts, like a car loan or mortgage.

The amount of coverage you buy will depend on your financial goals. For example:

  • If your goal is to pay off your house, you might purchase enough coverage to cover the remaining balance of your mortgage if you pass away.
  • If your goal is to provide income replacement to help your loved ones manage household expenses, you might choose a death benefit that equals 10 years of your income.

What happens after 20 years?

At the end of the 20-year life insurance term, the period for fixed premiums expires. If you decide not to renew the policy—or renewal is not available for the policy—no death benefit will be paid to your beneficiaries.

Can a term life policy be extended?

A 20-year term life insurance policy can typically be extended past the initial term, but doing so will increase your premiums significantly, and the rate will continue to rise each year. Renewal after the level-term period is usually not a good option because of the expense.

You may also have the option to convert the term life to permanent life insurance, which typically lasts a lifetime and can build cash value. But if you don’t need permanent life insurance, buying a new term life insurance policy would be more affordable.

All of these options will increase your premiums after the 20-year level term, so the smart choice is to buy term life insurance for the number of years you will need it. If you expect to need life insurance for more than 20 years, consider buying a 30-year term life insurance policy.

Who Is 20-Year Term Life Insurance For?

Here are some factors to weigh when deciding if 20-year term life insurance is a good fit for your situation.


Your age impacts how much you will pay for term life insurance coverage. Life insurance quotes get more expensive as you get older, and even more so if your health declines.

It’s best to lock in a rate for the number of years you will need life insurance. This will help you avoid needing to buy a new term life policy down the line, with higher premiums for the same death benefit.

However, if you are nearing retirement age and only want life insurance to cover your remaining working years, a 10-year term life insurance policy may suffice. Because of its shorter term, your premiums would be more affordable.

Financial responsibilities

Taking stock of your financial responsibilities will help you to determine whether a 20-year life insurance policy is a good fit. You might consider this type of life insurance if over the next 20 years you’d want the death benefit to help your beneficiaries with:

  • Making car payments
  • Paying a mortgage
  • Paying credit card bills
  • Planning for retirement
  • Providing for a spouse and/or children
  • Repaying student loans
  • Saving for education expenses

Life changes

Major life changes, such as having a baby, could necessitate purchasing 20-year term life insurance. If you want to make sure your child’s college education is paid for, for instance, you might want a 20-year policy in place to cover tuition if you were to pass away.

How Much Does a 20-Year Term Life Insurance Policy Cost?

The average cost of a 20-year term life insurance policy is $252 a year for $500,000 in coverage for a 30-year-old female, based on Forbes Advisor’s analysis of life insurance rates.

The amount you’ll pay for life insurance will usually depend on several factors, including your age, gender, health and smoking status. Occupation and hobbies can also factor in. Here are the average life insurance rates for a 20-year term life insurance policy for different ages and genders.

Is a 20-Year Term Life Policy Worth It?

A 20-year term life insurance policy could be worth it if you’re looking for a simple, affordable life insurance policy that guarantees fixed premiums for 20 years and a guaranteed death benefit if you die while the policy is in force.

Remember to consider what happens at the end of the 20 years. If you think you will still need coverage after 20 years, it would be better to lock in rates for a 30-year term life insurance policy or possibly even buy permanent life insurance, which is designed to last a lifetime.


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