What happens if you outlive your life insurance?

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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Nupur Gambhir

Nupur Gambhir

Senior Editor & Licensed Life Insurance Expert

Nupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake.

Edited byAmanda Shih

Amanda Shih

Editor & Licensed Life Insurance Expert

Amanda Shih is a licensed life, disability, and health insurance expert and a former editor at Policygenius, where she covered life insurance and disability insurance. Her expertise has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

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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 get a death benefit.

Ideally, you’ll still be alive when your term insurance policy comes to an end, so you can continue to enjoy life with your family. As your policy approaches expiration, you have some decisions to make about whether you still need life insurance and what next steps might be best for you.

Key takeaways

  • Your family won’t receive a death benefit after your term life insurance policy expires, so you’ll need a replacement policy to continue coverage.

  • You can convert your policy into permanent insurance or buy a new term policy to replace coverage.

  • You may not need new coverage if you don’t have financial dependents.

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

Do you still need life insurance after your term policy expires?

Whether you need life insurance after your policy expires depends on whether you still have dependents and whether you would still need a life insurance policy to support them if you died. If you no longer have financial dependents, then you likely no longer need life insurance. It's also possible that by the time your policy expires that you have saved enough money to “self-insure” your financial priorities without insurance.

You may still need a life insurance policy if you:

  • Still have loved ones who rely on your financial support

  • Have insufficient savings to cover end-of-life expenses

  • Are still paying off large debts, like a mortgage

As your current policy’s expiration date approaches, recalculate your coverage needs. You may need a smaller death benefit this time.

If you’re coming to the end of your term and think you may need continued coverage, start looking for coverage at least six months before your policy expires to ensure that you aren’t left with a coverage gap that would leave your family without financial support.

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

If your loved ones no longer need your financial assistance, 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. If you die the day after your policy expires, your family won’t get a death benefit of any size. 

Can I get money from my term life insurance policy?

If you don’t need life insurance anymore, you may be interested in whether you can get any money back. Life insurance is a product for financial peace of mind, not a loan or investment, so it’s not designed to offer a “return” on your money. 

There are some types of life insurance policies that do give you money back when you surrender the policy. These are permanent life insurance policies with a cash value component, which include whole life insurance, universal life insurance, and variable life insurance policies, among others.

Can you cash out a term life insurance policy?

Term life insurance doesn’t have a cash value component, so there isn’t a way to “cash out” a portion of your policy’s value.

There is a type of term life insurance called return of premium life insurance that returns any premiums you pay into your policy when your coverage expires (minus inflation and fees). However, these policies may cost two to three times as much as traditional term life insurance. Most people would be better off saving or investing the difference in premiums to maximize potential gains.

Another way that a term life insurance could be considered to pay out outside of the death benefit would be through living benefits riders. These are policy add-ons that you add when you apply for your policy that increase your premiums but allow you to pull from the death benefit to pay for medical expenses if you have a critical or terminal illness. This option can support end-of-life care, but it decreases the payout your beneficiaries get from your policy.

Another way you could get cash from your term life insurance policy while it is still active is by selling your life insurance policy. It’s legal to sell your policy to a third party, but profits are minimal after taxes and any broker’s fees. 

What happens if you cancel term life insurance?

In most cases, if you cancel a term life insurance policy, your coverage ends and you don’t get any benefit or premiums back. You might get a partial refund on premiums if you’ve already paid for future months of coverage in advance. 

The only other way to get a traditional term life insurance cancellation refund is to cancel during your policy’s free look period, which is usually 10 to 30 days from when your coverage began. Your policy will state the exact length of your free look period.

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

If you'll still have dependents or financial responsibilities after your policy’s expiration date, you may still need some life insurance coverage. Because your financial needs are different now, this is an opportunity to switch to a policy or coverage amount suitable to your current needs.

While you technically can’t extend your current term life insurance policy, you can convert your term policy into a permanent insurance policy or buy a new term policy. 

How to convert term life insurance into permanent life insurance

Many term life insurance 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 insurance classification even if your health has worsened, saving you some money on premiums.

However, permanent insurance is five to 15 times more expensive than term coverage. Your provider may offer a term conversion credit to lower your payments, but typically that only lasts for one year.

If you decide to take advantage of 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 permanent life insurance

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How to purchase a new term life insurance policy

If you’re still in good health, applying for a new term policy could be a better option than a term conversion. 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 rates.

When purchasing a new term policy, choose a coverage amount and term length that fits your current needs (e.g., if you have 9 years left on your mortgage, a 10-year policy might make sense). Compare quotes to find the most affordable premiums for your needs.

Some term life insurance options include:

  • Level term life insurance: Your standard term life insurance policy. You pay the same premiums for the entirety of the policy. This is likely the best policy option — offering the most coverage for the lowest price.

  • Instant decision life insurance: Instant decision life insurance policies offer traditional coverage at a competitive price. Instead of a medical exam, the insurer conducts a phone interview and comes to an application decision within days. It will be hard to qualify if you have health concerns.

  • Annual renewable term life insurance: Term life insurance that lasts only one year. During the first few years of this policy, you’ll typically pay less than you would for other term policies, but the rates increase each year and end up costing you more in the long run.

  • Decreasing term life insurance: Rarely offered by insurance companies, decreasing term life insurance is usually a cheaper option for term life insurance. With this policy, you pay the same amount for premiums each year, but the benefit amount decreases each year.

  • Return of premium term life insurance: The one type of term life insurance that refunds your premiums at the end of the policy term. Rates are much higher than regular term policies, and the return is often less than what you can accumulate by simply investing the difference between a return of premium policy and a level term policy.

  • No-medical-exam-term life insurance: Like instant decision life insurance, this application doesn’t require a medical exam. No-medical-exam underwriters conduct an in-depth evaluation of your health through existing records and come to a decision in two to three weeks or less.

  • Group term life insurance: Employer-sponsored life insurance that is often subsidized in cost. It’s easy to get but rarely provides enough of a death benefit and if you leave your job, you lose your coverage.

  • Mortgage protection term life insurance: A policy that pays off the remainder of your mortgage if you die while the policy is active. Your loved ones don't get any money.

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Outliving your term life policy is a good reminder to reassess your finances, needs, and priorities. If your family doesn’t rely on your financial contribution, you can simply let your life insurance policy expire. If loved ones would have a hard time financially without you, consider converting your term policy into permanent life insurance or getting a new policy to protect your family for years to come.  

Frequently asked questions

What happens if you live longer than your life insurance term?

Your coverage ends if you outlive your term life policy. Before it expires you can choose to convert your policy to permanent insurance, buy a new policy, or go without coverage, depending on your needs.

Do you get money back if you outlive your term life policy?

Your premiums are not refunded after your policy expires unless you bought return of premium life insurance, which is costly and not recommended.

Can you extend term life insurance coverage?

You can't extend your current term life insurance policy, you can convert your term policy into a permanent insurance policy or buy a new term policy.

Additional reporting by Jessica Sillers

Author

Senior Editor & Licensed Life Insurance Expert

Nupur Gambhir

Senior Editor & Licensed Life Insurance Expert

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Nupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake.

Editor

Editor & Licensed Life Insurance Expert

Amanda Shih

Editor & Licensed Life Insurance Expert

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Amanda Shih is a licensed life, disability, and health insurance expert and a former editor at Policygenius, where she covered life insurance and disability insurance. Her expertise has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

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