You planned ahead to protect your family by purchasing a term life insurance policy.
However, regardless of whether your term life insurance policy was for a single decade, 30 years, or something in between, you are on the verge of outliving your term life insurance policy.
Since term life insurance has an expiration date, what happens when term life insurance expires?
Here in this article, you’ll learn what to expect when a term life insurance policy expires.
What Happens When Term Life Insurance Expires?
Term life insurance does not necessarily “expire” when the term of coverage has ended. There is usually no need to do anything at the end of the term when it comes to conventional term life insurance. If you stop making payments on your insurance premiums, the insurance company will stop providing coverage.
When people purchase term life insurance, they rarely think about what will happen after the policy’s term has expired. Most people focus on paying their policy and may be unaware of what to do once their policy is up.
In contrast to the conventional definition of “expiration,” it refers to the term life insurance policy’s termination. Fortunately, when your policy’s term expires, it will not simply disappear.
But what happens after that? Let’s look at your options when your term life insurance policy expires.
Renew Your Term Life Insurance Policy
Your current life insurance provider may offer you the opportunity to renew your term life insurance coverage. Occasionally, the company makes the transition quick and easy by extending the same benefits without requiring a new underwriting process or completing medical exams.
Your life insurance company may allow you to renew your policy. However, it’s likely the premiums will increase significantly each year until you either cancel the policy or purchase another one.
Given its simplicity, renewing your term may be a viable option for some people. Nonetheless, it is recommended that you look into other options before deciding to extend your term insurance.
Get A New Term Life Insurance Policy
The opportunity to start over with a new term life insurance policy allows you to explore different options for the policy’s terms. When you make a new investment, you have the opportunity to shop around for service providers and reevaluate your requirements.
To make the best decision possible, you should reassess your needs for the death benefit, term length, and ability to pay premiums. Because you are older than you were when you purchased your first term policy, you should expect to pay a higher premium rate if you choose the same death benefit and term length as you did previously.
However, because your life circumstances have most likely changed, it could be a good idea to reconsider your options. The premium may be more affordable if you do not require the same level of coverage or the same length of time as previously.
Try A Permanent Life Insurance Policy
Suppose you don’t want to be concerned about term limits and want to be certain that your loved ones will get the death benefit regardless of your age. In that case, a permanent policy can provide that peace of mind. The policies that provide coverage under whole life insurance (the most common type of permanent life insurance) are only effective if premiums are paid regularly.
These policies are particularly popular among people in their retirement years who don’t require a large death benefit and can afford the premiums. Some permanent policies even accrue cash value, which can be used to supplement the policyholder’s income.