What Happens When My Term Life Policy Expires?

Term life insurance is the most affordable type of life insurance protection but it’s rates are only locked in for a certain period of time. Typically term life insurance can range from a one year renewable policy to a 10 year, 20 year or a even 35 year term length which guarantees the premium to stay level during this time. But what happens when your term length comes to an end? The answer is that, what actually ends is the fixed monthly payment and your policy becomes annually renewable term so rates are year to year. Problem with that is the rates after the initial term length can sometimes be unrealistic financially.

If your term life insurance is coming up close to the final year and you still need to have coverage in force then there are few options that might be available for you:

Shop for New Coverage

If you are in good health then it might be a good idea to shop around for a plan with a company that offers the best rates and benefits. You will most likely have to submit a new application along with a medical exam. The downfall of this option is that a lot of times policyholders have grown older and have more than one medical condition which might disqualify them from getting a new plan.

Convert To Permanent Coverage

If your policy came with a guaranteed convertibility provision which most term life policies do. Then you can convert to one of the permanent life insurance plans on guaranteed issue basis with your current life insurance company. This can be a great option if you don’t need as much coverage and don’t qualify for a new plan based on your age or health.  Be careful to convert at the right time as lot of companies allow the conversion before a certain age, most common being before age 75.

Renew the Term

If you are uninsurable and have missed the convertibility option then you will have to pay the increased premiums once your term life policy turns into an annual renewable term. Basically your plan renews year after year regardless of your health but every year your rates might increase significantly. This option can be very costly, so if this is your only option you can potentially reduce the amount of coverage to make it more affordable.

These are some options you have when the term life expires.

Here are some thing you can do to make sure you look out for your best interest when the term expires beforehand:

• Approximate the length of coverage properly and even go for a longer term when initially securing a policy
• Make sure your term life insurance policy is convertible and renewable on guaranteed basis.
• If you can afford it buy a permanent life insurance policy such as a Guaranteed Universal Life whether as the only policy or a second smaller addition to be there when the term expires.

If your term is about to expire or you are looking to secure a plan for the first time use our quoter to get an idea of what a policy might cost you today.

Feel free to call us at 888-492-1967 for any questions.