What happens when my term life insurance policy ends?

What do I do if I outlive my term life insurance policy? 

When a term life insurance policy matures, you have a few choices for what to do next. The life insurance options available will depend on your insurance company, age, health, and family history as well as the term life insurance policy you have.

Below are the options you may have when your term life insurance policy matures.

Renew your term life insurance every year

Most term life insurance policies will allow you to renew the policy year-to-year until you reach age 95. Check with your life insurance company to learn the exact rules for renewable term life insurance. 

When you renew your term life insurance by year, your premiums will likely increase. Although you can renew your policy to receive the same coverage and benefits, there’s no guarantee you can keep the same rates. 

Renewing term life insurance helps you avoid proving your insurability via a medical exam or other documentation, which could be beneficial if you developed serious health conditions during your term policy that would make it difficult to buy a new policy.

Convert your term life insurance to a permanent policy

Many term life insurance policies offer a term conversion rider. Term conversion means you can change your term life insurance into a permanent life insurance policy without reapplying or proving your insurability again.

Although term conversion is more common now, the rules for converting a policy vary widely from insurer to insurer. For example, some insurance companies limit the types of permanent life insurance you can convert to, while others place time or age limits on the conversion.

Term conversion can be a great option for policyholders who want to maintain their life insurance without the hassle of finding a new insurer. However, since permanent life insurance works differently from term life insurance, be sure to understand the difference before committing to a new policy fully.

Get a new term life insurance policy

Younger policyholders in good health can keep premiums low by getting a new term life insurance quote and purchasing another term life insurance policy. You can adjust the length of the term or the coverage benefits when you buy a new policy to keep your premiums affordable.

Buying a new term life insurance policy makes sense if you’re still relatively young and healthy. It’s also a good option for people looking to ensure their dependents are cared for until they are financially independent.

Buy a permanent life insurance policy

If your policy doesn’t allow term conversion, you can also purchase a new permanent life insurance policy.

Buying a permanent life insurance policy requires more work to research and apply for, but if term life insurance no longer meets your needs, it can be a good solution.

Remember that permanent life insurance is often far more expensive than term life insurance. So be sure the benefits and coverage on your policy are worth the higher premiums.

Let your life insurance coverage lapse

You can let your policy lapse if you no longer need life insurance. You won’t need to renew, reapply, or convert — you can simply let it expire.

Without a life insurance policy, your loved ones won’t get financial support in the event of your death. Make sure your dependents are taken care of before deciding to let your term life insurance expire. 

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Life Insurance Options After a Term Life Insurance Policy Ends

Not sure if switching to permanent life insurance is the best move for you and your family? Here’s a quick look at different life insurance types you might consider when your term life insurance policy ends:

• Whole life insurance. Whole life offers a guaranteed death benefit and rate of return. You’ll build cash value as you pay your premiums, which you can apply to your premium payments or borrow against in some instances. You can learn more about term life insurance vs. whole life insurance in this article. 
• Universal life insurance. For more flexibility in your benefits, consider universal life insurance. You’ll have more freedom to change your benefits or premiums throughout the policy. However, your interest rates will mirror general interest rate trends. 
• Final expenses insurance. If you don’t need a death benefit, final expenses insurance might be sufficient. Sometimes called burial insurance, it covers funeral costs upon your death. Rates are lower, but your loved ones won’t get a payout beyond burial expenses. You can read more about burial insurance for seniors in this article. 

Whole vs. universal life insurance work differently from term life insurance. If you decide to purchase a permanent life insurance policy once your term policy matures, take the time to understand the details to give you and your loved ones the best possible benefits.

Case Studies: What happens when my term life insurance policy ends?

Case Study 1: Renewing the Policy

When Sarah’s term life insurance policy was about to expire, she decided to renew it on a year-to-year basis. Although her premiums increased, she was able to maintain the same coverage and benefits.

Renewing the policy allowed Sarah to avoid proving her insurability again, which was beneficial as she had developed health conditions during the term of her initial policy.

Case Study 2: Converting to Permanent Life Insurance

John had a term life insurance policy that was nearing its expiration date. He opted to exercise the conversion feature offered by his insurance company and converted his policy into a permanent life insurance policy without the need for a medical exam or proving insurability again.

While the premiums for the permanent policy were higher, John wanted to ensure he had lifelong coverage without the hassle of finding a new insurer.

Case Study 3: Purchasing a New Term Life Insurance Policy

After her term life insurance policy expired, Emily, who was still relatively young and healthy, decided to purchase a new term life insurance policy. By getting quotes and comparing different options, she was able to adjust the length of the term and coverage benefits to keep her premiums affordable.

Buying a new term life insurance policy allowed Emily to continue protecting her dependents until they became financially independent.

The Final Word on What To Do When Term Life Insurance Ends

When your term life insurance policy expires, you have plenty of options to maintain coverage in the event of your death. Talk to your insurer about the options for your existing policy and get information about other types of types of term life insurance too.

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