Outliving term life insurance: What happens next?

When you outlive your term life insurance policy, you will no longer have coverage, but you can convert to a permanent policy or buy new term insurance.

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Tory CrowleyAssociate Editor & Licensed Life Insurance AgentTory Crowley is an associate life insurance and annuities editor and a licensed insurance agent at Policygenius. Previously, she worked directly with clients at Policygenius, advising nearly 3,000 of them on life insurance options. She has also worked at the Daily News and various nonprofit organizations.&Katherine MurbachEditor & Licensed Life Insurance AgentKatherine Murbach is a life insurance and annuities editor, licensed life insurance agent, and former sales associate at Policygenius. Previously, she wrote about life and disability insurance for 1752 Financial, and advised over 1,500 clients on their life insurance policies as a sales associate.

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Antonio Ruiz-CamachoAntonio Ruiz-CamachoAssociate Content DirectorAntonio helps lead our life insurance and disability insurance editorial team at Policygenius. Previously, he was a senior director of content at Bankrate and CreditCards.com, as well as a principal writer covering personal finance at CNET.
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Ian Bloom, CFP®, RLP®Ian Bloom, CFP®, RLP®Certified Financial PlannerIan Bloom, CFP®, RLP®, is a certified financial planner and a member of the Financial Review Council at Policygenius. Previously, he was a financial advisor at MetLife and MassMutual.

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A term life insurance policy gives you coverage for a set amount of time, usually 10 to 30 years. If you die during that time, the loved ones you’ve listed on your policy as beneficiaries get a death benefit. But if you're still alive by the time your policy expires, your coverage will end.

If your policy’s expiration date is approaching and you still need life insurance, you can either convert it to a permanent one, or buy a new policy. The decision will depend on your coverage needs.

Key takeaways

  • Term life insurance is only meant to last for a fixed period of time. At the end of the term, it expires. 

  • If you still need coverage after, you can convert your policy into permanent insurance or buy a new term life policy.

  • If you have fewer financial obligations, you may buy a new policy with a lower coverage amount — for example, just to pay for end-of-life expenses.

  • Shop for new coverage at least six months before your policy expires to avoid a coverage gap.

What to do if you outlive your term policy and still need coverage

As your current policy’s expiration date approaches, you have the opportunity to recalculate your coverage needs and switch to a policy with a coverage amount that meets your current financial obligations. Even if you still need some coverage, you’ll probably need a lot less than your original policy. 

While you technically can’t extend your current term life policy, you can:

  • Convert your term life policy into a permanent insurance policy, or 

  • Buy a new term life insurance policy. 

How to convert term life insurance into permanent life insurance

Many term life policies come with a built-in term conversion rider, which gives you the ability to convert your policy to a permanent policy before the term expires.

The main advantage of a term conversion is that you won’t have to go through underwriting again. You'll skip the medical exam and keep your original health classification even if your health has worsened, saving you some money on premiums.

But permanent life insurance is usually much more expensive than term life. Consider converting to a permanent policy only if your health has declined to a point where you won’t be eligible for traditional coverage and you’re only looking for a permanent policy like final expense insurance

This type of coverage doesn’t require a medical exam and pays out a small amount of coverage to cover end-of-life expenses, like a funeral or medical bills. If you decide to use the term conversion rider, you’ll need to make this change while your policy is active. Begin the process in the final year of your term at the latest.

Learn more about the differences between term and whole life insurance

How to purchase a new term life insurance policy

If you’re still in good health, applying for a new term policy will probably be your best option to continue coverage. But you’ll have to start the application process from scratch. 

Because you're older now, your rates will be higher, and any new medical conditions that have come up since you first applied for your original policy will also affect your life insurance costs.

When you purchase a new term life policy, you can choose a coverage amount and term length that fits your current needs — for example, if you have nine years left on your mortgage, a 10-year policy might make sense. 

You’ll likely need less coverage than when you first got life insurance. A licensed agent can help you compare term life insurance quotes and get you the best policy to continue your coverage.

While working as a licensed agent, I advised clients who wanted to extend their coverage to start looking for a replacement at least six months before their policy expired. This way, they could shop around without having a coverage gap that would leave their family without financial support.

Can you cash in on term life insurance?

Ready to shop for life insurance?

What to do if you outlive your term policy and no longer need coverage

If you’ve paid off your debts and your savings can support your retirement and end-of-life expenses, then you probably don’t need life insurance anymore. In this case, just let your policy expire. When the term ends, so will your coverage.

Additional reporting by Jessica Sillers

Authors

Tory Crowley is an associate life insurance and annuities editor and a licensed insurance agent at Policygenius. Previously, she worked directly with clients at Policygenius, advising nearly 3,000 of them on life insurance options. She has also worked at the Daily News and various nonprofit organizations.

Katherine Murbach is a life insurance and annuities editor, licensed life insurance agent, and former sales associate at Policygenius. Previously, she wrote about life and disability insurance for 1752 Financial, and advised over 1,500 clients on their life insurance policies as a sales associate.

Editor

Antonio helps lead our life insurance and disability insurance editorial team at Policygenius. Previously, he was a senior director of content at Bankrate and CreditCards.com, as well as a principal writer covering personal finance at CNET.

Expert reviewer

Ian Bloom, CFP®, RLP®, is a certified financial planner and a member of the Financial Review Council at Policygenius. Previously, he was a financial advisor at MetLife and MassMutual.

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