Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

Full Bio →

Written by

Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

Full Bio →

Reviewed by Benji Carr
Former Licensed Life Insurance Agent

UPDATED: Dec 15, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right life insurance coverage choices.

Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.

Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.

Quick Facts

  • Extended term life insurance is often confused with extended property insurance.
  • You can use the cash value of the permanent life policy to purchase extended term life insurance.
  • Under extended term life insurance, you can still keep your whole life insurance and the death benefit without canceling a life insurance policy.

Extended term life insurance is a type of life insurance that allows you to keep the value of a whole life insurance policy and turn it into a term life policy.

However, there are special conditions that will permit you to change your whole life policy without canceling. This short guide explains everything you need to know about term life insurance extension and the average term life insurance quotes.

Enter your ZIP code to find companies with competitive extended term life insurance rates and policies in your area.

What is extended term life insurance?

Affordable extended term life insurance is an option where you can take your life insurance policy’s cash value and change it to a term life policy. This option becomes available when you don’t want to cancel your permanent life (whole life) insurance policy.

Changing to an extended term life insurance policy will lower your life insurance rates when whole life insurance becomes too expensive.

Reduced Paid-Up Option

You can also get a reduced paid-up option, where you receive part of the full paid whole life insurance value.

The reduced paid-up option exclusive commissions and other expenses. Ultimately, the policyholder’s age will determine the value of the new policy. Also, the death benefit will be smaller.

Term Life Insurance

To under extended term life insurance, you need to know how term life insurance works. Term life insurance is a policy that gives you life insurance coverage for a set number of years, such as 10 years or 20 years.

The cash value of a life insurance policy is known as the coverage amount or coverage limit.

Return of Premium Rider

Term life insurance expires after the set number of years you purchased have passed. Once a term life insurance reaches the end of term, you’ll lose the policy’s cash value unless you have a “return of premium” rider.

A rider is an add-on that gives a life insurance policy extra benefits.

With “return of premium,” you can receive a portion or all the premiums you paid for during the term life policy.

Ready to compare quick life insurance quotes?

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

How is extended term life insurance calculated?

Every company calculates extended term life insurance differently. The standard for calculating extended term life insurance. So, how does it work?

Let’s say you have a $250,000 death benefit on a whole life insurance policy that you can no longer afford. Your cash surrender value is $40,000.

Cash surrender value is the money accumulated during the whole life insurance policy, which may be less than the actual cash value.

If you don’t want to cancel, you can move the cash surrender value of that whole life policy into an extended term life policy without canceling with the company.

Also, you’ll keep the $250,000 death benefit. However, the life insurance company will estimate the number of years it will take for your $40,000 cash to reach $250,000. Calculations depend on:

  • The coverage amount of your policy
  • Your age during the time you activated the extended term insurance
  • When you move from a whole life policy to an extended term life insurance, the policy’s cash surrender value.

Weigh your options before you make a final decision. There may be a way to budget your life insurance policy. If there’s no other way, consider adding a rider for more benefits to the extended term life insurance policy.

Extended Term Life Insurance vs. Extended Coverage

If you’re doing your research, it’s essential to include “term life insurance.” Extended coverage can be confused with extended insurance coverage for the property. Regarding property insurance, extended coverage is for losses due to fire, lightning, or other uncommon disasters.

Does cash accumulate for an extended term life insurance policy?

No. Your term life insurance policies don’t accumulate cash like whole life policies unless you have a “return of premium” rider. However, each company has different eligibility rules, so ask questions about riders on an extended term life insurance policy.

Pros and Cons of an Extended Term Life Insurance Policy

Here’s a list of pros and cons that comes with getting an extended term life insurance policy.

Extended Term Life Insurance Pros and Cons
Extended Term Life Insurance ProsExtended Term Life Insurance Cons
You keep your death benefit (coverage amount)You lose the whole life insurance perks
Ensures you keep your life insurance coverageRetirement income goes away
Lowers your life insurance rates per monthYou can't reverse your term life insurance back to whole life
Get Your Rates Quote Now

Compare RatesStart Now →

Whole life insurance can function as a retirement plan. However, retirement savings like 401(k) come with a penalty when you need to use it.

According to the Internal Revenue Service (IRS), you can’t move retirement savings to life insurance companies, but life insurance values can be transferred to different policies and different companies.

If you move your whole life insurance to an extended term life insurance, you will lose that option to move cash value around.

Ready to compare quick life insurance quotes?

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

Extended Term Life Insurance: The Bottom Line

Whole life insurance is more expensive than term life insurance. Transitioning from whole life to an extended term life insurance policy will make your life insurance more affordable, but you’ll lose a lot of neat perks.

However, some riders can help you get something back if you outlive your term life policy.

It might be a better idea to take your cash value and go to another life insurance company. Use our FREE comparison tool below to find extended term life insurance with the best companies in your local area.