What Happens When I Outlive My Term Insurance Plan?
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When you buy a term life insurance policy you purchase it for a set period, usually 10 to 30 years. You pay premiums throughout the term and if you die during that time, your family gets a death benefit. Ideally, you’ll no longer need life insurance by the time your policy expires. Consider a term conversion or buy a new policy at a lower coverage amount if you outlive your term and still need insurance.
Do You Still Need Life Insurance After Your Term Life Insurance Policy Expires?
Whether you need life insurance after your policy expires depends on your ability to support your dependents when you die. As your current policy’s expiration date approaches, recalculate your coverage needs. If you:
- Still have loved ones who rely on your financial support
- Have insufficient savings to cover end-of-life expenses
- Are still paying off large debts, like a mortgage
You may still need life insurance coverage to protect your family, though you likely need a smaller death benefit this time. If you’re coming to the end of your term and think you may need continued coverage, start looking for coverage at least six months before your policy expires to ensure that you aren’t left with a coverage gap that would leave your family without financial support.
What To Do If You Outlive Your Term Life Insurance Policy And No Longer Need Coverage
If your loved ones no longer need your financial assistance, you’ve paid off your debts, and your savings can support your retirement and end-of-life expenses, then you probably don’t need life insurance anymore. In this case, just let your policy expire. When the term ends, so will your coverage. If you die the day after your policy expires, your family won’t get a death benefit of any size.
What To Do If You Outlive Your Term Life Insurance Policy And Still Need Coverage
If you'll still have dependents or financial responsibilities after your policy’s expiration date, you need some life insurance coverage. Because your financial needs are different now, this is an opportunity to switch to a more suitable policy or coverage amount. While you technically can’t extend your current term life insurance policy, you can convert your term policy into a permanent insurance policy or buy a new term policy.
Conclusion
If you’re still in good health, applying for a new term policy could be a better option than a term conversion. When purchasing a new term policy, look for a smaller death benefit and a shorter term length, and compare quotes to find the most affordable premiums for your needs.
Also read: What Is SIP Calculator
