What Age Does Life Insurance Expire?
Many life insurance policies issued before 2004 have a maturity date of age 100, which means the policy expires, and coverage ends when the insured person turns 100. This situation affects those who bought permanent life insurance policies long ago and now want their heirs to collect the payouts. The problem is that people are living longer, and these policies that seemed adequate decades ago are causing financial panic.
The solution is that insurers have added a Maturity Extension Rider (MER) to existing policies issued long ago to extend their coverage. It is a simple fix to the problem. However, there are many lawsuits being litigated related to the age 100 problem. The most prominent plaintiff was German refugee Gary Lebbin, who turned 100 in 2017. The Transamerica unit offered to pay him the “cash value” of the policy when he reached the century mark, but the heirs are still pursuing a settlement in court.
The first problem with this solution is that acquiring “cash value” at age 100 defeats the purpose of life insurance, which is to provide a tax-free benefit for heirs. The second problem is that many universal life insurance policies are based on stock or bond market indices, and the cash values in them can decline if either of those markets perform poorly during certain years. If a person with one of these problematic policies dies before age 100, then the entire amount of the original policy is paid as planned. But living too long means the policy could be worth only a small amount or nothing at all.
| Problem | Solution |
|---|---|
| Policies issued before 2004 have a maturity date of age 100 | Insurers have added a Maturity Extension Rider (MER) to existing policies issued long ago to extend their coverage |
| Acquiring “cash value” at age 100 defeats the purpose of life insurance | Policyholders should consult with a financial advisor when approaching their policy’s maturity age |
| Cash values in universal life insurance policies can decline | Add a Maturity Extension Rider to the existing policy or exchange to a new policy with lower costs and a longer maturity |
Policyholders approaching their policy’s maturity age should consult with a financial advisor. It is important to get the right advice when buying a policy, or it may be too late to solve the situation when approaching the end of life. The insurance industry is based on sales rather than advice. Therefore, it is essential to compare policies with eight leading insurers and choose the best fit for your needs.
