Have Kids? Suze Orman Says Your Term Life Insurance Policy Should Stay in Effect Until They Reach This Age

It's solid advice worth heeding.

When it comes to buying life insurance, you have choices. You could opt for a whole life insurance policy, which will cover you on a permanent basis and accumulate a cash value over time. Or, you could get a term life insurance policy, which will only cover you for a preset period of time and won't accumulate a cash value at all.

While there are certainly benefits to getting whole life insurance, term life insurance can be far more affordable. Or, to put it another way, many people who buy whole life insurance end up struggling to make their payments and risk having their coverage lapse as a result. So in many cases, term life insurance really is the better choice because you don't tend to run into as many affordability issues.

Meanwhile, it's common to buy life insurance in order to protect your kids financially in the event of your passing. But since term life insurance runs out after a period of time, it's important to secure the right amount of it. And to that end, financial guru Suze Orman has some great advice.

Make sure your kids are covered through young adulthood

Choosing the term of your life insurance policy can be tricky. The lengthier that term, the more you're apt to pay. But if you choose too short a term, you might end up leaving your children in a troublesome spot if you end up passing away while they're still relatively young.

That's why Orman says it's best to set up a term life insurance policy that will remain in effect until your children reach early adulthood. In fact, in a recent podcast episode, Orman suggested getting life insurance that will last until your kids reach age 23 or 24.

At that point, they're likely to be done with college and possibly even graduate school. And that means that ideally, they'll be in a position to support themselves if you're not around to provide financial support.

So, let's say your oldest child is five, your youngest child just turned three, and you're shopping around for life insurance. A good bet would be to secure a 20-year term life insurance policy at a minimum. If you get a 10-year term life policy but pass away in 11 years, your children won't get a benefit out of your policy. And given that they'll only be teenagers at that point, that could result in a very unfavorable financial situation for them.

Don't skimp on coverage

The upside of buying term life insurance is that it tends to be fairly affordable. So if you're getting insurance to protect your kids, make sure to put a policy in place for long enough to carry them into young adulthood.

You may even decide to buy a 25-year term life insurance policy so you're able to provide financial support to your kids in case they decide to pursue a career that requires many years of schooling. But at the very least, putting coverage in place until your kids reach their early 20s is a solid bet.