When you buy a term life insurance policy you purchase it for a set period, usually 10 to 30 years. You pay premiums throughout the term and if you die during that time, your family gets a death benefit.
Ideally, you’ll no longer need life insurance by the time your policy expires. Consider a term conversion or buy a new policy at a lower coverage amount if you outlive your term and still need insurance.
Without a replacement policy, your family won’t receive a death benefit after your policy expires.
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 have enough savings and no 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 your ability to support your dependents when you die. As your current policy’s expiration date approaches, recalculate your coverage needs. 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
You may still need life insurance coverage to protect your family, though you likely 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 you cash out a term life insurance policy?
Unlike whole life insurance, there is no cash value component to cash out in term life insurance. Unless you bought return of premium term life insurance — which isn't recommended due to its high cost — you don’t get any refund for outliving your policy.
No one likes to pay for something they’ll never use, but think of it like your car insurance: You pay the premiums but hope to never need the service.
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 need some life insurance coverage. Because your financial needs are different now, this is an opportunity to switch to a more suitable policy or coverage amount.
How to convert term life insurance into permanent life insurance
Most 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 when 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.
Purchasing 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.
When purchasing a new term policy, look for a smaller death benefit and a shorter term length, and compare quotes to find the most affordable premiums for your needs.
You can choose from several types of term insurance:
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. 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
The best policy for people who are most concerned with paying off a mortgage in the event of their death. There aren’t any other benefits when purchasing this type of term life insurance policy.
If you outlive your term life insurance policy and you don’t need any more coverage, you can simply let your policy expire. But if you still need financial protection for your loved ones, you should convert your term life insurance into permanent life insurance or get a new policy altogether. Not doing so risks the financial health of your family.
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.