What Happens If You Outlive Your Term Life Insurance? Term life insurance offers coverage for a predetermined period, usually between ten and thirty years. Unlike permanent life insurance, it protects the entire life, expiring when the term ends. If you want to continue getting protection without buying a new policy, you can extend coverage through policy conversions or renewals.
For financial planning, you must comprehend what happens if you outlive your term life insurance. This article utilizes our extensive understanding of the insurance sector to guide you through various options and assist you in selecting the appropriate coverage.
What Happens If You Outlive Your Term Life Insurance
Nothing happens if you outlive your term life insurance. Your term insurance policy expires and its coverage lapses along with it when it finishes. You can purchase a new term or life insurance policy, renew your current one, or attempt to extend its coverage if you still require insurance.
There are two possible outcomes with term insurance plans:
- The policyholder’s family members receive a death benefit and any supplementary payouts if the policy nominee passes away during the policy’s term.
- If the insured exceeds the term life insurance coverage, no compensation will be provided.
How Long Does Term Life Insurance Last
Well, fixed prices for term life insurance are available for 10–40 years. Therefore, the monthly premium for a 40-year-old purchasing a $500,000 20-year term policy will stay at $30 until the policy’s expiration at age 60.
Purchasing term life insurance is ideally done to shield your loved ones from financial harm at their most vulnerable times. The years that would be financially burdened by your untimely death due to your loss of income.
Over these years, you may be:
- Bringing up kids.
- Putting money aside for retirement.
- Settling a mortgage.
- Managing a company.
Families should consider carrying term life insurance to prepare for hypothetical situations in case of your unavailability.
What to Do When Your Term Life Insurance Is Expiring
Generally, you are not required to act if your term life policy is no longer needed. Simply let your coverage expire. However, you should consider your options for life insurance before your existing policy ends if you still need coverage. You could choose from the following options:
Renewing your term life policy
A guaranteed renewability clause is a feature in many term life insurance plans that allow coverage renewals annually after the policy’s expiration date. Life insurance does not require renewal or medical exams, and the death benefit remains unchanged. That being said, each year you renew, your premium will probably go up.
This option is suitable for those who require additional years of coverage. To make sure your beneficiaries would get a death benefit, for instance, you may extend your term policy for a few more years if you were given a terminal diagnosis and were not expected to qualify for a new one.
Converting from term to permanent
If your policy has a conversion clause or term conversion rider, you can convert your term life insurance policy into a permanent, whole life insurance policy. Conversion provisions are typically included in term life insurance policies, but to ensure this option is available, review your policy or contact your insurer. Furthermore, converting from term insurance to a whole-life policy may be beneficial if you’ve experienced health changes, have dependents, or have more debt than anticipated.
Buying a new policy
You can either search for a new life insurance provider or purchase a new policy from your current insurer. Remember that unless you are eligible for easy-issue term life insurance, you will have to reapply and undergo a fresh medical examination.
If you cannot convert your term policy into a whole life policy, purchasing new insurance may be the best option. Generally, a new whole-life policy will cost more than a new-term policy, but your premiums will still probably be higher than they were with your previous policy. This is because your new insurance will be determined by your age and health at this time.
Do You Get Your Money Back At the End of a Term Life Insurance
No. Whether or not you used the coverage, you were covered for the duration for which you paid. You don’t get your money back when your term life insurance policy expires.
Final Thoughts
The first thing to consider if your term life insurance policy is about to expire is if you still need insurance. You might not need your income if your former dependents are no longer dependent on it. If insurance is necessary, though, there are a few methods to get it. Try extending your current term life policy or converting to a permanent policy with that insurer if your health is questionable. Consider purchasing a new term life insurance policy if you are in good health, as it may be more affordable.