What Happens When a Term Life Insurance Policy Comes to an End?

What Happens When a Term Life Insurance Policy Comes to an End?

Term life insurance is a temporary form of life insurance coverage. This means that you choose to be covered for a specified period of time, for example 10, 15, 20 and even 30 years. To illustrate how a term policy works, let’s say that you have a 20 year term life insurance policy. This means you would pay a premium for the next 20 years. As long as your payments are on time, you are covered. One form of term insurance to consider is a level policy, which means your premiums will stay the same for the length of the term policy.

A common question asked by many people is what happens at the end of the term period if I do not pass away? In this situation you have several options. If you do nothing at the end of the term period, the policy will expire and come to an end and you are no longer covered with that life insurance policy. At this point, you can apply for a new term life insurance policy and, once approved, you lock in a new fixed premium for another term period. Keep in mind your monthly payments may be higher because you are now older. Also if your health has declined this could impact your rates and your ability to be approved for life insurance.

Another option, if your term policy is defined as a guaranteed renewable policy, you can renew the policy at the end of the term period. The advantage of a renewable policy is that you do not have to show any evidence of insurability. This means no health exam or health questions are needed in order to renew the policy. However, this feature also means that you will have to renew the policy on an annual basis, so the cost of your insurance will go up every year moving forward. It is at this point, that term life insurance can potentially become very expensive.

A conversion option may also be part of your term policy. This means that you can convert the term life insurance policy to a permanent version of life insurance, such as whole life insurance in an amount of equal or lesser value. Again, if you were to convert a term policy, the premium you pay, would now be based on permanent or whole life insurance rates for your age. It’s a good idea to confirm that your term life insurance policy comes with level payments, renewability and conversion features.

When you obtain a term life insurance policy, you are paying for protection and peace of mind for a defined period of time. Think about the cost of not having any life insurance in place. That cost could very well be much higher than the premium you would pay for a set period of time. Life is full of unexpected events and proper planning can literally save your family’s finances. 

About the author: Dan Cody has been in the life insurance business for over 7 years. He loves playing a variety of instruments including the guitar, bass, drums, and piano. He also supports cancer research foundations and volunteers at local pet shelters. Dan enjoys helping customers understand life insurance, so they can find a solid policy that fits their needs. You can reach Dan at 1-800-651-1953 or DCody@Pivot.com.