Term life insurance has a specific duration the policy is expected to last, and once that timeframe elapses, the coverage also ends there. Yes, term life insurance can expire, but here’s the good news: There are ways to still enjoy coverage even if your policy expires.
Understanding Term Life Insurance Expiration
Generally, most term life insurance policies last for a specific period of time. Most insurance companies issue term life insurance policies for as long as 10, 20, 30 years, and above.
Once the period on your policy ends, it automatically marks the end of your coverage as well. If you still seek protection, you could either convert or extend your policy.
There are so many options you can explore if your term life insurance is on the brink of expiring.
What to Do When Your Term Life Insurance Expires
Perhaps your term life insurance policy is nearing its expiration date; you should consider getting a new policy if you have a major financial obligation.
This is recommended especially to those who have house payments, have people who depend on their income, owe major debts, and want to leave money for their beneficiaries through life insurance.
If you belong to any of the categories of people mentioned, consider the following options:
• Buy another term life insurance policy
Before your term life insurance policy expires, you can reach out to your insurer and let them know your intention of purchasing a new policy.
Buying a new term life policy is ideal for those who have financial obligations such as mortgage payments or dependents.
As you get older, you will most likely pay higher prices for your policy, but if you wish to lower the cost, you can buy a shorter term instead.
One of the ways you can get the best rate for a term life insurance policy is by shopping around. Regardless of what you were charged by your current insurer, it is possible to get better rates outside.
• Extending term life insurance
Extending the life of your term life policy is also another option you can consider before your policy expires. Most term life insurance policies feature a conversion rider that allows you to extend the coverage of your policy.
While trying to extend your policy, understand the requirements of your insurance provider. Some insurers have limitations on the age and amount of coverage you can extend.
You can also seek a second opinion from your insurance agent to know if extending your policy is the best option for you.
Nevertheless, it is essential to note that, by extending your term life insurance, your premiums are likely to change based on your current age.
• Convert your term policy to permanent life insurance
If you’re on the lookout for a life insurance policy that lasts for the rest of your life without having to go through the streets of extending, consider permanent life insurance.
Although so many people opt for term life insurance, permanent life insurance also has its perks. With permanent life insurance, coverage lasts throughout the lifespan of the policyholder.
Most often than not, insurance companies allow policyholders to convert term life insurance to either whole or universal life insurance. Each of these policies features death benefits, fixed premiums, and investment returns.
However, converting a term life policy to a permanent life policy is often expensive because of the extensive coverage it provides.
• Buy a new permanent life insurance policy
Rather than converting your term life to permanent life insurance, why not buy the policy instead? If you eventually decide on having permanent life insurance, converting your term life policy may look like the best option.
However, if your health condition is good, you should reconsider and buy the policy rather than converting it.
This is because you have just one option for conversion, and most times, the cost of the policy is on the high side. It is wise to also compare quotes for other policies to get the best rate.
FAQS
What happens when my term life insurance policy expires?
Once your term life insurance policy expires, it denotes that the policy has reached the end of its coverage period and you will no longer have access to the benefits and protection under the policy.
Can I get a new term life insurance policy after my old one expires?
Of course! Once your old policy expires, you can apply for a new term of life insurance immediately. Remember that the older you get, the higher the premiums you’ll pay on your policy.
This is because old age comes with so many health issues, and health status is one of the factors that impact your eligibility and premiums.
How long before my term policy expires should I start looking for a new one?
In our opinion, we recommend that you start exploring other options. 6–12 months before your current term life policy expires.
This is to give you more than enough time to shop around, get quotes, and complete the application process for a new policy.
Can I convert my term policy to a permanent life insurance policy?
It is entirely possible to convert your term policy to a permanent life insurance policy. Most term life insurance policies feature the option to convert to a permanent policy before the term expires.
You could either convert to whole life or universal life insurance, depending on your needs and preferences. Please note that the premium for a permanent life insurance policy is higher, unlike a term life policy.
