20-Year Term Life Insurance: Pros, Costs & When It Makes Sense

In this guide, you’ll learn how 20-year term life works, who it’s best suited for, how much it typically costs, and what happens when the term ends. We’ll also cover key pros and cons, plus tips for choosing the right policy for your financial goals.

Key Insights

• A 20-year term life insurance policy provides fixed premiums and a guaranteed death benefit for 20 years.
• It’s ideal for covering time-limited financial needs like mortgages or raising children.
• Premium costs depend on age, health, gender, and coverage amount.
• If you outlive the policy, coverage ends, but some insurers allow conversion to permanent life insurance.

What Is a 20-Year Term Life Insurance Policy?

When purchasing a 20-year term life insurance policy, you will first need to select a coverage amount, also known as a death benefit. You’ll also need to choose a beneficiary (or beneficiaries) who will receive the death benefit.

Your beneficiaries can then use the death benefit to pay off any outstanding debts you have after you pass, such as mortgages, car loans, student debt, or everyday bills. The money can also go toward funeral and burial expenses.

The amount of coverage you need to purchase will depend on your financial goals. For example, if your goal is to pay off your home, you’ll want to purchase enough coverage to take care of your remaining mortgage balance should you pass away.

Or, if your goal is to provide your beneficiaries with income replacement to help them manage household expenses, then you might want a plan that’s equivalent to 10 years of your current income.

Pros of 20-Year Term Life Insurance

One of the biggest appeals of a 20-year term life insurance policy is affordability. Additionally, these policies offer locked-in rates, so you’ll pay the same premium throughout the whole 20-year term.

This type of policy is also great for those who want to protect their beneficiaries but don’t want to pay for a whole life insurance policy with higher premiums. The policy length offers peace of mind, knowing you’ll have financial protection during a time in life when your costs may be high, or your children may be in college.

With a 20-year term life insurance plan, you’ll rest easy knowing if you have large debts, your beneficiaries will receive a payout that can help cover these debts.

Cons of 20-Year Term Life Insurance

Of course, there are also drawbacks of 20-year term life insurance that you should keep in mind. One major drawback is that a 20-year term life insurance policy only offers temporary coverage. If you outlive the 20-year term, you’ll have to purchase a new policy, which will likely come with higher premiums.

Additionally, unlike whole life insurance policies, 20-year term life insurance policies don’t come with a cash value beyond the death benefit. With whole life insurance, a portion of your premium payments goes into a cash value account that earns tax-deferred interest at a rate guaranteed by your insurer. The cash value may equal or surpass your policy’s face value.

Policyholders of whole life insurance can borrow from the cash value when they need it, they can use it to pay for premiums, surrender the policy in exchange for the cash value, or use it to boost the death benefit. The cash value and its uses are unavailable to term life insurance policyholders.

What Does a 20-Year Term Life Policy Cost?

A 20-year term life insurance policy rate typically costs anywhere between $20 and $400. Why such a big discrepancy? This is because there are a number of different factors that can affect the cost of 20-year term life insurance, including:

• Age: Generally speaking, young people will get cheaper life insurance rates because they’re statistically less likely to die.

• Gender: The average American man lives until 73, while the average woman lives until 79. Therefore, women tend to be offered lower premium rates than men.

• Lifestyle: Insurance companies will determine your rate by considering your criminal record, occupation, driving history, hobbies, and activities. (For example, if you engage in riskier hobbies like scuba diving or bungee jumping, you may pay a higher premium).

• Health status: Insurance companies will look at your height and weight, personal and family medical history, and smoking habits before offering you a rate. Those with serious medical conditions (like heart disease) are considered riskier to insure, so they’ll pay higher monthly premiums.

• Coverage amount: The more coverage you select, the higher monthly premiums you can expect to pay.

How Much Life Insurance Coverage Should You Choose?

You should select a coverage amount that matches any debts or obligations you want to cover. For example, if your goal is to cover your mortgage and you have $100,000 left to pay, you’ll want at least $100,000 in coverage.

What Happens If You Outlive Your 20-Year Policy?

By definition, the term life insurance policy lasts 20 years. When your coverage expires, your life insurance protection is gone, and you won’t have any residual value.

If you want to continue with your coverage, you’ll need to purchase a new policy. As mentioned, the cost will be higher, as you’ll have lived 20 years longer and therefore will have 20 years less life expectancy.

You may also have the option to convert your 20-year term life insurance policy to permanent life insurance, which usually lasts a lifetime and can build cash value.

How to Choose the Right 20-Year Term Life Insurance Company

Before purchasing a policy, you’ll want to spend time shopping around and comparing quotes. While it’s tempting to focus solely on the cost, there are other features you want to look for:

• Living benefits: Some life insurance companies let you access your own death benefits in the event of a severe illness. You can use this money to pay for medical expenses or other needs.

• Guaranteed renewable policy: Some companies let you automatically renew your policy once it expires, albeit at a higher rate.

• Conversion options: Some companies let you convert your term policy into a permanent policy. There’s typically a deadline for this, so make sure you look into the time window.

• Adjustments: Look into whether the company lets you make adjustments to your policy should your life circumstances change. Typically, you can only adjust downward.

Where Can You Buy a 20-Year Term Life Insurance Policy?

There are several venues available for purchasing term life insurance. These include:

• The workplace: Purchasing term life insurance through work can be a good idea, as you may qualify for affordable group rate pricing. However, keep in mind that coverage amounts can be limited.

• Online: Shopping for term life insurance online is easy, as you can get multiple quotes with the press of a button.

• Working with a financial professional: If you’re unsure about the type of policy or the length of coverage you need, you may want to work with a financial professional.

What to Expect When Applying for a 20-Year Term Life Insurance Policy

After you’ve gathered several quotes and found a company you’d like to buy from, you’ll fill out an application. You’ll want to decide how much coverage you need.

To decide on the coverage, add up all of the expenses you want to cover and subtract any assets your family could use if you pass away. When in doubt, err on the side of more coverage.

After filling out an application, you’ll typically speak with a life insurance representative. The company may ask you to sign releases, such as to access your medical records. It may also ask you to do a life insurance medical exam, which typically includes taking your height, weight, blood pressure, and blood and urine samples.

You’ll also be asked about your prescription medications, and depending on your age and the amount of coverage you select, you may need to do an EKG and cognitive assessment.

Meanwhile, the life insurance company will do some background research on you. In addition to pulling your medical records, this may include pulling your motor vehicle report and criminal record.

After this research, the company will offer you a final rate, and you can choose to either accept it or keep shopping.

Is 20-Year Term Life Insurance a Good Fit for You?

A 20-year term life insurance policy is an excellent option for those who want to save money and pay premiums at a locked-in rate. It’s also a great option to ensure your family members are covered in the event of your passing. However, be aware that if you outlive your coverage, you’ll need to buy a new life insurance plan, which will likely come at a higher cost.

The next step is to shop around for the best life insurance policies and request quotes from different companies. Then, you fill out an application and select how much coverage you want. As stated, we recommend erring on the side of too much coverage to be safe. Once your application has been approved, you’ll have peace of mind knowing you have solid coverage for the next 20 years.

Frequently Asked Questions

1. What Is a 20-Year Term Life Insurance Policy?

It’s a type of term life insurance that provides coverage for a specified 20-year period. If the policyholder passes away during this period, beneficiaries receive a tax-free death benefit. After 20 years, coverage will expire unless it is renewed or converted.

2. How Much Does 20-Year Term Life Insurance Cost?

Rates vary widely based on age, gender, health, lifestyle, and coverage amount. Premiums can range from $20 to $400 per month. Younger, healthier individuals usually pay less.

3. What Happens If I Outlive My 20-Year Policy?

Once the 20-year term ends, coverage expires. You can choose to buy a new term policy, convert to permanent life insurance (if your policy allows it), or go without coverage.

4. Who Should Consider 20-Year Term Life Insurance?

It’s ideal for individuals with time-limited financial responsibilities, such as paying off a mortgage, raising children, or replacing income during peak earning years.

5. Can I Convert My 20-Year Term Policy to Whole Life?

Many term policies allow conversion to permanent life insurance, often within a specific window (e.g., the first 10–15 years). This allows you to extend coverage without requiring another medical exam.

Ready to compare 20-year term life insurance plans?

Explore top-rated providers and receive free quotes to find the best coverage tailored to your needs.

👉 Compare Term Life Insurance Plans