What Is 20-Year Term Life Insurance?

20-year term life insurance offers protection for your loved ones with features that are simple to understand.
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What Is 20-Year Term Life Insurance?

Written by Brian Greenberg
CEO / Founder & Licensed Insurance Agent

Last updated: November 24th, 2022

Reviewed by Paige Geisler
Licensed Insurance Agent

Your debts, budget, family situation, health, and age help determine whether this is the best option for you.

What Is 20-Year Term Life Insurance?

A 20-year term life insurance policy promises to pay a sum of money called a death benefit to a person, multiple people, or an organization that you name as your beneficiary. The term or coverage period lasts for 20 years.

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

A 20-year term life insurance policy starts with an application. Once submitted, the insurance company’s underwriting department reviews the application. The insurance company may require you to undergo a medical exam or answer a medical questionnaire as a part of the underwriting process. The underwriter uses health information, public records, and details from your application to determine whether to provide coverage and how much to charge for it.

If the insurer approves your application, your life insurance may not go into effect on day one. Many companies impose a two-year waiting period on all policies. Make sure to examine each company’s terms and conditions to see what kind of limitations they put on their policies. In some cases, your death benefit begins immediately. This means that your beneficiaries can receive the full benefit whether the policy is in place for one month or 10 years.

In exchange for the protection the term life policy provides, you pay a fee called a premium. Payment schedules vary. Many policies have you pay monthly, but some require or allow the option of quarterly or annual payments. The premium is fixed, meaning it remains the same throughout the policy. Provided you continue to make payments on time, the insurance company cannot cancel your policy.

What Happens to the Policy at the End of 20 Years?

What happens to your life insurance at the end of the 20-year term depends on the conditions of the policy. Some life insurance simply ends. If you want to continue to have life insurance, you will need to purchase an entirely new policy.

A renewable 20-year term life insurance policy gives you the right to renew the policy at the end of the term. You receive a new policy with premium rates based on your current age and health status. The renewed policy will cost more than the original policy. Insurance companies may not offer renewable 20-year term life insurance to older adults.

Convertible 20-year term life insurance makes it possible to convert term coverage into permanent insurance that lasts until you die. Some convertible term policies allow you to transfer all or some of your insurance to a new policy at any point before the term ends. Other policies have a conversion window, such as during the first 5 years.

Who Is Right for a 20-Year Term Life Insurance Policy?

A 20-year term life insurance policy may be a good fit if you:

  • Have a debt such as a mortgage or student loans that will end in the next 20 years
  • Only want life insurance until your children reach adulthood
  • Want to spend as little as possible on premiums
  • Prefer a straightforward policy
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What Is the Cost of a 20-Year Term Life Insurance Policy?

The cost of a 20-year term life insurance policy depends on your age, health, gender, and whether you use tobacco. Generally, older adults, those with health conditions, and tobacco users pay more. Refer to the table below for average costs for a $500,000 twenty-year term life policy.

Average Cost of a 20-Year Term Life Policy With a $500,000 Death Benefit

What Is the Cost of a 20-Year Term Life Insurance Policy?

AgeAverage Monthly Rate (Nonsmoker)Average Monthly Rate (Smoker)Total Premium Cost of Policy (Nonsmoker)Total Premium Cost of Policy (Smoker)
25$30$90$7,200$21,600
30$35$95$8,400$22,800
35$40$120$9,600$28,800
40$50$180$12,000$43,200
45$80$280$19,200$67,200
50$120$430$28,800$103,200
55$190$665$45,600$159,600
60$320$1,010$76,800$242,400
65$595$1,530$142,800$367,200

How Does a 20-Year Term Life Insurance Policy Compare to Other Life Insurance Policies?

A 20-year term life insurance policy differs from other types of insurance as outlined in the table below.

How Does a 20-Year Term Life Insurance Policy Compare to Other Life Insurance Policies?

Type of InsuranceDurationPremium FeaturesDeath Benefit FeaturesCash Value
20-year term life20 yearsGenerally low cost, remains the same throughout the policyRemains the same throughout the policyDoesn't build cash value
Whole life insurancePermanentUsually costlier than term, remains the same throughout the policyRemains the same throughout the policyGuaranteed cash value with a modest interest rate
Universal life insurancePermanentLets you increase or decrease the premium size, typically costs more than term lifeAllows you to adjust the size of the death benefitGuaranteed cash value, but the rate of growth may be affected by changes you make to the policy
Variable universal lifePermanentAllows you to increase or decrease premium size, typically costs more than term lifeLets you adjust the size of the death benefitCash value grows based on the performance of investments and is not guaranteed

How Can You Get a Quote for 20-Year Term Life Insurance?

Obtaining a quote for a 20-year term life insurance policy depends on what services the insurance company provides. Many insurers now offer free quotes online. Others will only give you a quote over the phone. Insurance companies that sell policies exclusively through insurance agents rather than directly to customers may require you to obtain a quote from an agent in your area. Rates can vary widely from company to company, and requesting multiple quotes can help you get the best deal.

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Key Takeaways

20-year term life insurance promises to pay a set death benefit over a 20-year period and usually features fixed premiums that are less costly than permanent insurance. People who need coverage for a limited time or who prefer lower premiums or a simpler policy are likely to benefit from it.

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