Legal and General America, the parent company of Banner recently announced they will now sell term life policies for 35 and 40 years lengths.
Until now, only American General would go up to 35 years but Banner has matched that and taken it up a notch with the 40-year life insurance product.
It's a big deal to the industry but it is good for consumers?
(Hint: For some people, yes, it's very good. For others, stay away!)
What You Will Learn (click section link to jump ahead)
What Exactly Does 40 Year Term Life Mean?
When you choose straight term life insurance, you will select the number of years the policy protects you for. Typically 10, 20, and 30 years are the most common with many companies also offering 15 and 25-year options.
As long as you continue to make the premium payments, the life insurance carrier is entering into a contract promising to pay the death benefit to your designated beneficiary for up to the whichever term length you selected.
The longer the term, the more expensive the premiums will be.
In return, you are getting a locked in rate for a longer period no matter what health complications you may develop over time.
With Banner's announcement of 35 and 40-year term lengths, they are willing to guarantee those contracts for a long time. Longer than any other carrier will do for term insurance.
When Does A Long Term Make Sense?
When deciding on term length, the main things you need to focus on are:
- In the event of a death, what things does the death benefit need to cover?
- Will these things change in the future or remain the same?
Maybe you are putting the policy in place to make sure a mortgage gets paid off if the insured dies. Will that mortgage still have a payment 20 years from now? What about 40 years from now?
Maybe you are protecting your spouse and small children until they are grown up and supporting themselves. If the the kids are 2 and 4 years old now, better consider a longer term. If they are already in high school, maybe a 10 or 15-year policy will be sufficient.
Sample 40 Year Term Quotes
Since Banner is the only company offering 40 years, we can't compare it to competitors but here are some sample rates.
Use our quote engine to see your personal rates. Next section below will compare the cost to a shorter term.
Preferred health classification (non-smoker) : 40-year level term life insurance quote
Comparing The Cost of Banner's 40 Year OPTerm
Since the longer term lengths always cost more, we need to find a way to accurately compare the price differences between a 30-year term policy (previously the longest available) and the new 40-year term duration.
Here's how we'll do that:
We'll compare the 40-year term life rates to someone buying a 30-year term now and then a new 10-year term once that expires.
Jasmine is a 28-year old healthy woman and qualifies for the Preferred health class. She wants $300,000 level term insurance. With Banner's 40 year term, she'll pay $31.87 per month.
If she chooses a 30-year term now, she'll pay $21.86 per month. Based on today's rates, getting a new 10-year policy afterward (she will be age 58) will cost $58.05 per month.
Total premium dollars spent over 40 years by choosing the 40-year policy = $15,298
Total premium dollars spent over 40 years by choosing the 30-year now and doing 10-year later = $14,835
But hold on a minute!
There are two extremely important things to point out here:
1) Those comparisons are using today's rates and in today's dollars. Just on inflation alone, the cost of that 2nd policy 30 years from now is going to be more than double. Without a doubt, Jasmine will pay more by splitting the policies.
2) This is the big one. A lot can change in someone's health between age 28 and 58. Will Jasmine still qualify at the Preferred health class 30 years down the road? The historical data says probably not. This means her rates will be much higher or even worse, maybe she's no longer insurable due to the development of a serious health condition.
Bottom line: The trade-off is that by paying more now on the 40-year term policy, you will save in the future and protect yourself from the risk of declining health increasing your premiums.
When Is the 40 Year Term a Bad Idea?
New York Residents
This one is pretty simple. Legal and General America is the parent company and sells its life insurance through Banner in all but one state. In NY, it's sold under the William Penn Life Insurance Company of New York. They are not offering the 35 or 40-year term choices.
Need for Permanent Coverage You Can’t Outlive
40 years is a long time, but it's not forever.
Do you think you'll still need life insurance coverage once that term is up? It may be wise to look at some form of permanent coverage that stays active until you die.
Maybe you need to make sure burial expenses are taken care of?
Maybe you want to leave a legacy to your heirs?
Once the 40-year term is over, the cost to continue coverage is going to be much higher even if your health still allows you to be approved and insured at that point.
There are many types of permanent or whole life insurance and they can be quite complex.
One option we suggest looking into is Guaranteed Universal. It doesn't have the investment or cash accumulation aspect , which keeps premiums reasonable, but it's guaranteed to stay active up to age 121.
Banner has it's own GUL policy and we've done a detailed breakdown on all the top companies offering GUL. You can learn more about the Pros/Cons of Guaranteed Universal HERE.
Over the Age of 55
Banner's OPTerm 40-year policy expires at age 95 so if you are much older than 55 at the time of application, it doesn't make sense. You can consider their 35-year term or compare with other companies offering 30-year term lengths.
Expecting a Future Decrease In Coverage Needs
With a really long term like such as 40 years, you are expecting that your coverage needs will remain relatively the same without big reductions. This is true for some people but not for everyone.
What if the main purpose of your policy was to make sure your kids' college education was paid for if you died early? Well, once they are out of the house and graduated then you may not have such a large coverage need.
If you are planning for a future situation where the amount of life insurance death benefit needed will substantially decrease, a term as long as 40 years may not be the best fit. Instead, consider laddering multiple policies to step down your coverage in the future. This saves money but accurately reflects your changing needs.
About the Company - Banner (Legal and General America)
If you are just starting your life insurance shopping, it's quite possible you've never heard of Banner or their parent company, Legal and General America.
The reason is simple, Banner choose to not spend on advertising.
These savings allow them to consistently offer some of the lowest term life pricing for many ages. They aren't always the lowest price, but they are quite often.
Don't make the mistake of thinking that low pricing means this is a fly by night cheap insurance company. Not the case at all.
Check out these stats:
- Legal and General has been providing life insurance since 1836.
- A+ grade from industry rating group A.M. Best that judging the financial stability of life insurance carriers.
- Over $700 billion of life insurance coverage in force.
- $5 billion in financial assets.
Policy Details - OPTerm
The Banner OPTerm is available in durations of 10, 15, 20, 25, 30 and the newly released 35 and 40 years.
The company uses the nearest age when quoting life insurance rates. This essentially means that in their eyes you turn a year older 6 months BEFORE your next birthday.
This is something to keep in mind if you are putting off getting coverage. No matter how healthy you are, rates go up for each year older a person is. That price is the one that you lock in for the entire term so it pays to get things taken care of and not delay.
Banner offers the following riders on the OPTerm.
- Waiver of Premium
- Accelerated Death Benefit
- Additional Term Insurance
- Children's Rider
You can read up more on what each rider does in our guide here.
Conversion to Permanent Products
Policyholders may convert their OPTerm for the full duration of the guaranteed level premium period or up to age 70, whichever comes first.
Need More Help Deciding What's Best For Your Situation?
Fill out a quote request to get started and we'll be in touch soon to answer questions about Banner and any other life insurance carrier.
Each situation is different and the best company for you may not be one you are even considering yet.
Life insurance is all we do every single day so it's our mission to find our clients the lowest rates. Every. Single. Time.