What happens when your term life insurance policy expires?
One of the major concerns with term life insurance is that your coverage will eventually expire. This is why many policyholders want to know what their options are as the end of their term draws near. Here’s what you can expect once your term life insurance is set to expire.
- Can You Lose Your Term Life Coverage?
When your term comes to an end, you don’t automatically lose your insurance. You actually have the option to keep paying premiums and maintain your coverage. However, there is a catch to this—once your term ends, your premiums will increase significantly. Typically, most people cannot afford to keep paying such high rates, and they are forced to find a more affordable coverage option. On the plus side, this option does help the policyholder avoid coverage gaps as they search for alternative life insurance.
- My Term is Ending, What Are My Options?
If you are reaching the end of your policy term, then you have a couple of options. If you are retired, your children are financially independent, and you no longer have ongoing financial obligations (debt payments, mortgage payments, etc.), then you can simply let your coverage lapse and go without life insurance coverage.
If you still need coverage, then the easiest and most common option is to buy a new term life policy. While this will require you to go through the application and medical examination process all over again, this tends to be the most affordable life insurance option. While your premiums will likely be higher than before (due to your age and health), your rates will be locked in for the entirety of your term, so you do not need to worry about sudden price hikes.
Finally, you may also have the option to convert your life insurance policy at the end of your term. This option will allow you to change your term life policy into a permanent life insurance policy where you do not have to worry about your coverage expiring. Please note that this option is not available on all term life policies and, even if it is, you might be subject to certain limits regarding when you can convert your policy. For instance, many policies will only allow you to convert to permanent life within a specified window of time, usually within the first five years after the policy has been issued. Other policies may require you to convert your policy before turning a certain age, usually before you turn 70.
This is what you need to know about your life insurance options when your term policy is close to expiry. Do you need help securing the right life insurance coverage to fit your needs and your budget? If so, then contact the experts at The Schwab Agency in Colleyville, Texas. We are eager to get you the coverage that you need today.