A term life insurance policy offers affordable protection for a set period, often between 10 and 30 years. But once the term expires, premium payments and the death benefit cease. So, what happens if a policyholder outlives their term life insurance policy and still wants or needs coverage? Several options are available, including considering new term and whole life insurance policies. If you outlive a term life insurance policy, here are three options to consider:
Get a new term life insurance policy
Once existing coverage has ended, you may apply for a new life insurance policy that better meets your current financial needs. For example, if you have 10 years remaining on your mortgage, you may want to apply for a 10-year term policy that will expire at the same time the debt is fully repaid.
Keep in mind that since coverage gets more expensive as you get older, you could end up paying more for a policy very similar to the one that just expired. That’s where an option like renewal could end up saving you money.
Renew your term life policy
Certain renewable term life insurance policies allow you to continue coverage as needed at the same coverage level without applying or going through the approval process again. Often, policies offering guaranteed renewability let you renew once a year.
Of course, as you get older and renew the policy, the premiums will increase, but the good news is you won’t need to worry about eligibility. Especially if you develop health issues toward the end of your term policy, you can continue with the same policy worry-free.
Consider permanent life insurance
If switching to lifetime coverage feels like the best option, you can apply for a new permanent life insurance policy. This can be a great way to get guaranteed coverage for the rest of your life and leave a legacy for kids or grandkids.
The permanent life insurance premiums you’ll pay will go toward the death benefit and cash value, so that you can give added financial security to your loved ones while building wealth at the same time. If you choose to go this route, it’s wise to do some research and compare various life insurance providers and policies to find a permanent life insurance plan that works for your needs.
The bottom line
It’s important to work with your life insurance company to discuss options at least 6 months before your term life insurance policy expires. That way, you can make an informed decision about continuing coverage without worrying about a policy lapse. And if you want to get a new term or permanent life insurance plan, make sure to compare your options and consult with a licensed life insurance agent if needed. Continuing to have coverage can ensure that your loved ones get the financial security they need in the event of your passing.