Updated February 26, 2021|6 min read
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If you live past your policy’s expiration date, ideally you’ll no longer need life insurance by then. If you still need coverage after your policy expires, consider a term conversion or buy a new policy at a lower coverage amount.
Without a replacement policy, your family won’t receive a death benefit after your policy expires
You can use a term conversion for 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
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 that conversation with your insurer or broker six months before your policy expires to ensure that you aren’t left with a coverage gap that could put your family at risk.
If your loved ones no longer need your financial assistance, you’ve paid off your debts, and your savings can support your retirement and final expenses, then you probably don’t need life insurance anymore.
In this case, you can just let your policy expire. When the plan 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.
Unlike some whole life insurance policies, there is no cash value component to cash out in term life insurance. Unless you bought return of premium term life insurance, which is not recommended due to high costs, 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 use the service.
If you still have dependents or financial responsibilities after your policy’s end date, you’ll 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.
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. Ask your provider if you’re unsure if your policy includes a term conversion rider.
The main advantage of a term conversion is that you won’t have to go through the underwriting process again, which allows you to skip the medical exam and keep your original insurance classification even if your health has worsened.
You’ll also avoid the higher term life premiums for older applicants. A $500,000, 20-year policy costs under $30 per month for a healthy 35-year-old male. A healthy 55-year-old male will pay $150 per month for the same coverage.
However, permanent insurance is five to 15 times more expensive than term coverage. Though your provider may offer a term conversion credit to lower your payments for the first year, you’ll only see reduced costs in the short-term.
If you decide to take advantage of the term conversion rider, you’ll need to make this change while your policy is active. Make sure to begin the process in the final year of your term to avoid missing out.
Ready to shop for life insurance?
If you’re still in good health, applying for and buying a new term policy could be more affordable than a term conversion.
Start the application process for a new term policy as soon as possible to avoid a coverage gap. Even though you have bought life insurance coverage before, changes in your health or other records could mean you’re ineligible to buy a new policy now. The earlier you start, the better prepared you will be for any hiccups in the application process.
When purchasing a new term policy look for a smaller death benefit and a shorter term length, and compare quotes to find the most competitive premiums for your needs.
You can choose from several types of term 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 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 24 hours.
A type of term life insurance that allows you to re-evaluate how much you spend on premiums every year. During the first few years of this policy, you’ll typically pay less than you would with other term policies, but the rates increase each year and end up costing you more in the long run.
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.
The one type of term life insurance that refunds your premiums at the end of the policy term, though at the cost of higher premiums. 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.
The best policy type for people adhering to stay-at-home mandates as it doesn’t require a medical exam. No medical exam life insurance underwriters usually still conduct an in-depth evaluation of your health through previous records.
Employer-sponsored life insurance that is often subsidized in cost. It’s easy to get but often doesn’t provide enough of a death benefit and if you leave your job, you lose your coverage.
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.
Ready to shop for life insurance?
If you outlive your 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 policy into a whole life insurance policy or get a new policy altogether. Not doing so risks the financial health of your family.
Before your coverage ends you can buy a new policy, convert your term policy to whole life insurance, or go without life insurance going forward, depending on your needs.
You can’t extend the term of an existing life insurance policy, but you can buy a new policy if you need a longer term length.
Your premiums are not refunded after your policy expires unless you bought return of premium life insurance, which is costly and not recommended.
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