In an ideal world, main financial commitments like your mortgage or the expense of raising your children would outlive your term life insurance. You can choose how long this coverage covers you for. Rather than automatically renewing, your term life insurance will simply end when it expires.
Even in situations where you have amassed other assets and are financially stable, a life insurance policy can give your loved ones additional security for a long time to come. When a term life insurance policy expires, you have options, but you need to act early to make sure the rest of your life insurance coverage is complete.
What to Do When Your Term Life Insurance Expires
You have choices if you would like to continue being covered after your term life insurance policy expires. Generally, term life insurance policies cover the duration of your primary debts, such as mortgage or child-rearing expenses. However, this isn’t always how things turn out.
You might still require life insurance even if your term life policy expires if you:
- Make rent for your home.
- Have additional large loans.
- Have dependent children still on you.
- Have a spouse who is dependent on you for money.
- Wish to use life insurance to leave your heirs with money
In case you fall into any of these categories, you have several choices to think about.
Get another term insurance policy
For those with mortgage payments or dependents, buying a shorter-term life insurance policy can lower costs. It could also be advantageous to compare prices and include health-related information when completing the application. It is imperative to select the greatest deal available, even in the face of likely price rises.
Get it annually
An annual renewable term life insurance policy gives you the option of continuing coverage or not each year, making it perfect for those with modest needs for funds. However, rates can change, therefore level-term insurance is preferable for long-term purposes. Extending your current insurance for one year at a time allows you to skip a medical test, but it may be costly.
Change it to permanent life insurance
Permanent life insurance has the advantage of lasting a lifetime, but it is more expensive than term life. It is available in several forms, including whole, universal, equity-indexed universal life, and variable life insurance. If you need coverage after your term life policy expires, you can convert it to a permanent policy without having to take another medical exam or answer health questions. Most companies allow conversion to whole life insurance or universal life, with a deadline and age cutoff of 75.
Get a new permanent life insurance
Converting your term life policy may seem like the most practical option if you decide you want permanent life insurance. It may not be the most cost-effective alternative, however, if your health remains good. Generally, the provider will offer only one conversion option, which is usually one of its more expensive policies.
As a result, it makes sense to compare estimates for various types of insurance. Most people should consider purchasing a new term life insurance policy if they still require life insurance coverage. If you fall under any of the exceptions, you should contact a life insurance broker or agent.
What Happens at the End of a Policyholder’s Term Life Insurance Policy
The coverage of your term life insurance policy expires, and you are no longer required to pay payments. If you die after the policy ends, your beneficiaries will be unable to receive a death benefit. Certain policyholders may only need term life insurance for a brief period, such as to safeguard their children until they reach adulthood and begin working.
It may be possible in this case to let the insurance expire without obtaining new coverage. However, some people may discover that they still require life insurance and will need to obtain a new policy.
When the Term on My Life Insurance Expires
The duration of your life insurance policy, or term, is governed by the duration you choose when you purchase it. Check your policy document if you’re unsure of the expiration date of your coverage. It’s important to keep in mind that by the time you age 90, your life insurance or decreasing life insurance policy needs to be canceled. Seek further information from your policy booklet and policy summary regarding eligibility conditions.
How Long Does Term Life Insurance Last
Though possibilities differ by insurance, you can often choose between 10, 20, or 30 years of coverage. As long as you continue to pay your insurance premium, your coverage will be in effect for the term you have chosen.
Can You Extend a Term Life Insurance Policy
You can continue to receive your death benefit and continue to be covered if your term life insurance policy has a guaranteed renewability clause. This normally happens on an annual basis. If your insurance contains a conversion clause or term conversion rider, you can also convert your term policy to a whole-life policy.
Can You Get Your Money Back After Your Term Life Insurance Expires
You will not be able to receive your premiums back once your policy expires unless you have a return of premium rider. If you outlive the term of your coverage, you can get your premiums back with this optional add-on. When adding a premium rider, you must budget for the possibility that it would raise your rates.