Term life insurance offers coverage for a specific period, and the policy expires at the end of the term. Here are some things that happen when a level term life insurance policy comes to an end:
| Scenario | What Happens |
|---|---|
| Policy Expires | The policyholder stops paying premiums, and there is no death benefit. A notice is sent by the insurance carrier that the policy is no longer in effect. |
| Return-of-Premium Policy | A check is sent for the amount paid into the policy throughout its term. |
| Term Conversion Rider | The policyholder can convert the term policy to a permanent insurance policy without taking a medical exam. Conversion policies typically have strict deadlines for conversion, often several months before the policy expires. |
| Renewal Option | The policyholder can renew the policy on an annual basis, but the premium will most likely increase each time. |
If you need further coverage after the term policy expires, consider these options:
- Purchase a new term policy
- Convert the term policy to a permanent life policy
- Purchase a permanent life insurance policy
Keep in mind that a medical exam may be required for a new term policy or permanent policy. If you have a health issue, the rate will likely increase. Older people pay more for their term life insurance policies because age is a factor.
Permanent life policies are more expensive than term policies, but they offer certain benefits, such as coverage until death and a tax-deferred cash value account. Final expense or burial insurance is a type of permanent insurance that may be suitable for older adults or those with pre-existing health conditions.
Choose the option that is best for your needs and budget. Be sure to review your policy documents or speak to an agent to learn more about your options.
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Article Sources
- Progressive. What Happens After Your Term Life Insurance Ends?
- Insurance Information Institute. What Happens If You Outlive Your Term Life Insurance?
- FINRA. Term Life Insurance: What It Is, Different Types, Pros And ...
- Investopedia. Understanding Level Term Life Insurance
- ACL (Administration for Community Living). What Happens If You Outlive Your Term Life Insurance?