What Happens If You Die Before Your Life Insurance Term?

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The principal purpose of life insurance is to provide financial support for your dependents should you die prematurely. However, what happens if you die before your life insurance term? Here are some options:

Option Description
Guaranteed renewability provision Many term policies have this provision that allows you to keep your insurance in effect after the end of the original term as long as you continue to pay the premiums. Your premiums are likely to rise each year based on your current age, but you typically won’t have to submit to a new physical exam. Some policies allow you to renew on this basis up to age 95.
Conversion to a whole life or universal life policy Your term policy may include a provision for converting to a whole life or universal life policy, again without a physical exam. The new insurance policy could continue for the rest of your life or as long as you need it. The premium on the new policy will be higher than you have been paying for term insurance. Still, you may have the option of converting to a policy with a smaller death benefit in return for a lower premium if that works for you.
New term policy If you’re reaching the end of your current term policy, some insurers write policies for people up to the age of 80. You will typically need to have a medical exam, especially if the policy is for over a certain amount, such as $50,000. Financial advisors will often recommend you research the available policies for older consumers to find the best term life policy.
Portfolio of smaller policies If you have health issues that make it difficult for you to buy a sufficiently large term insurance policy, you may be able to cobble together a portfolio of smaller policies that will add to what you need. These policies may not require a physical exam, but they may ask for some health information. You could also be eligible for group life insurance through your employer or through a trade association, college alumni club, or other organization to which you belong.
Final expense or burial insurance These are typically whole life policies with relatively small payouts, such as $20,000 or $25,000. They may require no medical exam and will provide money that your beneficiaries can use for any purpose.

When a term life insurance policy matures, your life insurance coverage on the policy ends. However, some companies will allow you to extend your coverage or purchase permanent life insurance to replace it. If you have a term life insurance policy that is due to expire in the near future, the first question is whether you still need insurance. If your former dependents no longer rely on your income, you may no longer need it. However, if you do need insurance, there are several ways to obtain it.

Remember, it’s best to make plans at least a year before your policy ends to ensure that you have the most options available to you. The COVID-19 pandemic has reportedly caused many insurers to reevaluate their life insurance products for older people, so it’s important to keep that in mind as well. Do your research and talk to your insurance company or agent to find the best option for you.

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