Your Term Life Policy Is Expiring. Here Are Your Options
If you have a term life insurance policy, you know that it will eventually expire. This is because term life insurance is designed to provide coverage for a specific period of time, usually 10, 20, or 30 years. Once the term expires, so does the coverage.
If your term life policy is expiring, you have several options:
- Renew your policy. Most term life policies have a guaranteed renewability feature, which means that you can renew your policy for another term without having to go through a new medical underwriting process. However, your premiums will likely increase each time you renew.
- Convert your policy to a permanent policy. Some term life policies have a conversion rider, which allows you to convert your policy to a permanent policy (such as whole life insurance) without having to go through a new medical underwriting process. This can be a good option if you need permanent life insurance coverage, but you are concerned about your health or age.
- Purchase a new term life policy. If you still need term life insurance coverage, you can purchase a new term life policy from your current insurer or another insurer. However, your premiums will likely be higher than your original policy, since you are now older and may have health issues.
- Do nothing. If you no longer need life insurance coverage, you can simply allow your policy to expire. However, keep in mind that you will no longer have life insurance coverage if you die after your policy expires.
Which option is right for you?
The best option for you will depend on your individual circumstances. If you are unsure which option is right for you, you should talk to a financial advisor.
Here are some things to consider when making your decision:
- How long do you still need life insurance coverage? If you only need life insurance coverage for a few more years, renewing your term life policy may be the best option. However, if you need life insurance coverage for the rest of your life, converting to a permanent policy or purchasing a new term life policy may be a better option.
- What is your health like? If you are in good health, you may be able to get a lower premium on a new term life policy than you would on a converted permanent policy. However, if you have health problems, you may have difficulty getting approved for a new term life policy.
- How much can you afford to pay in premiums? Premiums for permanent life insurance policies are typically higher than premiums for term life insurance policies. If you are on a tight budget, renewing your term life policy may be the best option.
- If you are considering converting your term life policy to a permanent policy, be sure to read the fine print carefully. Some conversion riders have restrictions, such as age limits or health requirements.
- If you are shopping for a new term life policy, be sure to compare quotes from multiple insurers. Premiums can vary significantly from one insurer to the next.
- If you are unsure which option is right for you, talk to a financial advisor. A financial advisor can help you assess your needs and choose the best option for your situation.
If your term life policy is expiring, it is important to understand your options and choose the one that is best for you. By carefully considering your needs and budget, you can make an informed decision that will help you protect your loved ones financially.