How Does a 20 Year Term Life Insurance Policy Work?
When you buy a 20-year term life insurance policy, you pick a coverage amount. This is the death benefit. You also choose a beneficiary or beneficiaries who get the payout if you die during the policy term. They can use this money for things like funerals, education, bills, or paying off debts like a mortgage or car loan.
The coverage amount you pick depends on your financial goals. Maybe you want to pay off your house. So, you buy enough coverage to cover your mortgage balance. Or, you might want to ensure your family has enough money for living expenses. In that case, you might choose a death benefit that equals 10 years of your income.
For the 20-year term of your policy, you pay a fixed premium. This means your monthly or yearly payments stay the same, no matter your age or health changes. If you keep paying your premiums, your beneficiaries get the full death benefit if you die during the term.
