What To Do When Your Term Life Insurance Expires
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If your policy’s term is coming to an end, you can just let the coverage expire and go without life insurance. That is an option that some people choose, especially if their children are mature and financially independent, and there are enough saved assets to take care of their spouse or partner.
What To Do When Your Term Life Insurance Policy Expires?
1. Extend your current term policy
Technically speaking, you can usually keep on renewing your policy on a year-to-year basis until you are 95 years old. That’s because most term life policies have a guaranteed renewability feature that lets you extend your coverage – and current death benefit – without going through a new underwriting process and getting another medical exam. However, the insurance company will change your premium if you extend. While this can make sense for some people, it may not be the best choice for most.
2. Convert your term policy to a permanent policy
Many term life policies sold now contain a conversion option or rider, which lets you convert your term policy into a permanent policy without having to provide evidence of insurability (i.e., getting a new medical exam). Different insurance companies have different ways of handling term-to-permanent conversion, so you’ll need to look at your policy to see what your available options are. For example, some companies will let you convert to a universal life policy but not a whole life policy. There will be a specific deadline as well: some insurers let you convert at any point during the term of your policy; others may only let you do so during the first few years of coverage, or until a certain age. This may be an attractive option, but you should begin the conversion process well before your term expires – at least a year before your policy’s stated conversion deadline.
3. Get a different life insurance policy
Think about how your life has changed. Maybe you have more savings and don’t need the same amount of life insurance coverage. Or maybe you have a bigger family and need more. The type of policy that was right for your needs 10, 15, or 20 years ago may not be the best choice for your current needs today. This can be an opportunity to fix that.
Conclusion
Combining a permanent (whole or universal) policy with a term policy can be one way to get the higher death benefit and additional coverage you need for a limited period of time – for example while your children are still at home.
