What Is 10-Year Life Insurance?

Life insurance provides essential financial security to your dependents, and it can be comforting to know that your family won't experience financial hardship if you pass away. There are several types of permanent and temporary life insurance available, and which one suits you depends on your circumstances. 

Ten-year term life insurance is a popular option for older adults without young child dependents, but it's not right for everyone. Find out what 10-year term life insurance is, how much it costs and whether it meets your needs. 

What Is 10-Year Term Life Insurance?

Term life insurance is a type of life insurance that covers you until the end of an agreed term. If you die before the policy expires, your beneficiaries receive a guaranteed death benefit. If you outlive the policy term, your coverage ends and you don't get a death benefit. Some companies let you claim your premiums back if your insurance includes a return-of-premiums feature, but these policies are usually more expensive. 

Many people choose term life insurance because the premiums usually cost less than permanent life insurance. You'll pay level premiums until the end of your policy, but you can't adjust your payments in response to changing financial circumstances like some permanent insurance types. 

However, unlike permanent life insurance, your policy won't build cash value. You may also need to purchase another policy if you still need life insurance when the term ends. Some insurers let you extend your policy at the end of the term or convert it to a permanent policy.

Ten-year term life insurance is term life insurance offering coverage for 10 years after purchasing the policy. It's one of the shorter term life insurance policies available, and you can also purchase term insurance lasting 15, 20, 25 and 30 years or longer. 

How Much Does 10-Year Term Life Insurance Cost?

How much term life insurance costs depends on how risky it is for a company to insure you. Generally, term life insurance is cheaper if you're young and healthy, but advanced age and preexisting health conditions can increase the cost.

Overall, underwriters assess how likely you are to die during the policy term to determine your monthly premiums. Average term life insurance premiums increase year-on-year as you get older. Therefore, it's best to purchase a policy as soon as possible once you decide you need it. 

Another factor affecting the cost of term life insurance is the coverage amount. The higher the death benefit, the more you'll pay in premiums. While it can be tempting to pick the policy with the lowest monthly premiums, it's essential to ensure the death benefit is substantial enough to cover the loss of your income for your dependents.

The table below provides an idea of how much you'll pay for 10-year term life insurance per year by age, sex and coverage amount:

Is 10-Year Term Life Insurance Right for Me?

Whether a 10-year life insurance policy is right for you depends on your financial and family circumstances. As life insurance protects your family from experiencing financial hardship after your death, a shorter term could be suitable if you have older dependents. For example, 10-year life insurance could be a great option if your dependents are unlikely to still rely on your income at the end of the term and you anticipate paying off your mortgage and other debts in the next 10 years.

However, a 10-year term life insurance policy could be too short if you have young children or a long repayment period left on your mortgage. In other words, if your dependents will still be reliant on you in 10 years' time and you don't want to leave your family responsible for your debts, a longer policy may be a better bet.