Term life insurance offers affordable coverage for a specified period—typically 10, 20, or 30 years. Once that term ends, your policy expires, and you no longer have coverage unless you act. If you're approaching the end of your term, it's essential to understand your options to ensure continued financial protection for your loved ones.
Convert to Permanent Life Insurance
Many term life policies include a conversion option, allowing you to switch to a permanent life insurance policy—such as whole or universal life—without undergoing a new medical exam. This option is particularly valuable if your health has declined since you first purchased the term policy.
Pros:
- No medical exam required
- Lifetime coverage
- Premiums remain level
- Policy may accumulate cash value over time
Cons:
- Higher premiums compared to term insurance
- Coverage options may be limited based on your original policy
Tip: Conversion privileges often have deadlines—sometimes within the first few years of the term or before a certain age. It's crucial to review your policy and initiate the conversion process well before these deadlines.
Renew Your Current Policy
Some term life policies offer a guaranteed renewability feature, allowing you to extend your coverage on a year-to-year basis without a new medical exam. However, your premiums will likely increase annually, reflecting your age at the time of renewal.
Pros:
- No medical exam required
- Continued coverage without a lapse
Cons:
- Significant premium increases over time
- Renewal may only be available up to a certain age
Consideration: This option may be suitable if you're unable to qualify for a new policy due to health issues but still need coverage.
Apply for a New Term Life Policy
If you're in good health and still require coverage, applying for a new term life insurance policy can be a cost-effective option. Premiums are typically lower for new policies, especially if you're younger and healthier.
Pros:
- Lower premiums compared to permanent insurance
- Flexible term lengths to suit your needs
Cons:
- Medical underwriting required
- Premiums will be based on your current age and health status
Tip: As an independent insurance agent, we have the flexibility to compare policies and rates from a wide range of trusted carriers, ensuring you receive the most competitive options tailored to your needs.
Explore Final Expense or Burial Insurance
If your primary concern is covering end-of-life expenses, final expense or burial insurance policies are designed to provide a smaller death benefit to cover funeral and related costs. These policies often have simplified underwriting processes and may not require a medical exam.
Pros:
- Simplified application process
- Smaller death benefit tailored for final expenses
Cons:
- Lower death benefit compared to traditional life insurance
- Limited coverage scope
Consideration: This option is ideal if you want to ensure your funeral expenses are covered without burdening your family.
Let the Policy Expire
If your financial situation has changed and you no longer have dependents or significant debts, you might choose to let your term life insurance policy expire. This decision should be made after careful consideration of your current and future financial needs.
Pros:
- No further premium payments
- Simplicity in not managing an insurance policy
Cons:
- No coverage for your beneficiaries
- Potential financial burden on loved ones in the event of your passing
Tip: We will work with you and your financial advisor to assess your situation and determine if this is the best course of action.
The expiration of your term life insurance policy is a pivotal moment to reassess your life insurance needs. Whether you choose to convert to a permanent policy, apply for a new term policy, or explore other options, it's essential to make an informed decision that aligns with your current circumstances and future goals.
Remember, life changes—such as marriage, the birth of a child, or nearing retirement—can significantly impact your insurance needs. Regularly reviewing and adjusting your coverage ensures that you and your loved ones are adequately protected. If you need assistance navigating your options or finding the right policy for your needs, one of our licensed agents will guide through the process and prepare a tailored life insurance policy tailored to your unique situation.