State Farm life insurance Select Term 20 is an individual term policy providing guaranteed level premiums and death benefit protection for exactly 20 years. The death benefit pays out income tax-free to your named beneficiaries if you pass away while coverage is active. Premium amounts and actual eligibility depend on factors such as your age, health history, lifestyle, and underwriting class. This guide explains how the 20-year term works, coverage rules, conversion rights, and renewal costs.
Core Features and Coverage Limits
The policy provides pure insurance protection for a set two-decade window without an internal cash-value component. The premium remains fixed throughout the initial 20-year span, meaning scheduled rates will not increase regardless of changes to your health during that timeframe.
The coverage parameters include:
- Minimum face amounts starting at $100,000
- Issue ages available from 18 to 65 years old
- Flexible premium payment schedules billed monthly or annually
- Potential multi-line bundling discounts on auto insurance when pairing policies through the same carrier
Because death benefit payouts are not classified as ordinary earned income under federal tax law, beneficiaries typically receive the proceeds in a single lump sum without federal income tax withholdings.
Underwriting and Eligibility Requirements
Qualifying for coverage involves an evaluation of your current medical profile and mortality risk. Although some minor policies or simplified issues bypass exams, standard Select Term policies generally require full underwriting.
Underwriters check medical records, prescription databases, motor vehicle driving history, and occupational or recreational hazards. Tobacco status significantly impacts rate categories. Applicants categorized under non-tobacco rates pay substantially lower premiums than tobacco users for identical death benefit amounts. In many cases, applicants complete a brief paramedical visit to collect blood and urine samples and measure baseline indicators such as blood pressure and body mass index.
Conversion to Permanent Coverage
A significant provision in this policy is the conversion privilege. The contract allows you to convert your 20-year term into permanent coverage—such as whole life or universal life—without undergoing a new medical exam or proving insurability.
The primary rule requires initiating the conversion before age 75 while the policy remains active. This feature protects policyholders who develop serious medical conditions, chronic illnesses, or injuries during the 20-year term that would otherwise prevent them from obtaining new life insurance. When converted, the new permanent policy’s premium is recalculated based on your attained age at conversion, not your original age when you purchased the term policy.
Available Policy Add-Ons and Riders
You can customize coverage at issuance by adding optional riders to address specific family or health scenarios.
The most common optional riders include:
- Waiver of Premium for Disability: Waives ongoing policy premiums if you suffer a total disability lasting at least six consecutive months before reaching age 60, keeping coverage intact while income is interrupted.
- Children’s Term Rider: Provides term life coverage for eligible dependent children until they turn 25 or until the primary insured reaches age 65, with an option to convert to permanent coverage at adulthood.
- Additional Insured Rider: Extends term life coverage under the same master policy to an eligible family member, such as a spouse.
What Happens When the 20-Year Term Ends
Once the 20-year term concludes, the guaranteed level-rate period expires. You do not have to cancel the policy immediately, as the contract is guaranteed renewable up to age 95 without medical re-underwriting.
However, coverage transitions to an annually renewable term structure. The premium resets each year based on your current age. Because annual renewal costs jump steeply and continue to rise each year thereafter, maintaining the policy past year 20 becomes financially impractical for most policyholders.
If your insurance needs have ended—for instance, if your mortgage is paid off and your children are financially independent—you can simply let the coverage lapse without penalty or surrender charges. If you still require life insurance at that stage, purchasing a new underwritten policy or having exercised your conversion rights earlier is typically much more economical than paying annual renewal rates.
Practical Situations Suited for 20-Year Coverage
A 20-year duration directly matches standard personal debt obligations and family dependency periods. Households frequently match the 20-year term with the remaining balance on a 15- to 20-year fixed home mortgage, ensuring surviving dependents can remain in the home without mortgage distress.
It is equally practical for new parents seeking coverage that lasts until newborns reach early adulthood and college graduation. Business partners also use 20-year terms to fund buy-sell agreements or protect commercial loan obligations while debt remains outstanding.
