What Happens After Life Insurance Term Ends

Are you near the end of your life insurance term or wondering what happens after life insurance term ends?. For the most part, you have two options when a life insurance policy ends: renew or convert.

When a term life policy gets to the end of its term and cancels then you’ll no longer have coverage. To avoid that you can convert it to whole life or you can renew it if that’s an option.

Other than being notified that your policy has ended not much happens when you reach the end of your life insurance term. Aside from notice and no more life insurance you’ll also no longer pay premiums.

At what age should you stop term life insurance?

The answer to this is dependent on two things I think, so it’s going to be slightly different for each person. That said, generally speaking, premiums start to get really high for a large death benefit around age 60. The two factors I would say are your income and other coverage.

If you have permanent life insurance already then needing a term policy isn’t really necessary. If you don’t have the coverage and you have a lot of income then it may be worthwhile for you to get a term policy. If you have a term policy that ends around age 60 it may be better to convert it to whole life or let it lapse.

Can you convert term life to whole life?

Not always. Many carriers include the option for a policyholder to change their policy from temporary coverage(term) to permanent life insurance (whole life). However, depending on the carrier and specific policy you purchase it may not be included.

The good thing about being able to convert is that no medical exam is needed. Depending on changes in your life it may be a great option. If you get cancer for example your life insurance options become more limited. Also, most carriers require you to do the conversion before a certain age. Look at your policy or as your agent what the rules are for the policy you have or are looking into.

What does it cost to convert term to whole life?

There is no upfront cost to convert a policy from term to whole life. There is an increase in premium but no extra fee is required. So as long as you are ready for the increase in premium converting could be beneficial.

In addition to not having a cost, you also save on costs associated with getting a new policy. Costs like a new medical exam, time to go through the health questions, and other application and underwriting processes.

Due to the increase in premiums another option you have with the conversion itself is a partial conversion. Instead of converting the entire death benefit to a whole life policy, you convert a portion of it only.

What’s the longest-term life insurance you can get?

Most life insurance companies offer the standard 5-year up to 30-year term policy. There are some companies however that offer a 40-year term option. At the time of writing, I’ve only seen two companies Banner Life and Protective Life Insurance. As time goes on there will probably be more.

Something to think about is the premiums are in part made based on the length of the term. So a 40-year term policy is going to be more expensive than a 15, or 30-year policy.

Do you get your money back at the end of a term life insurance?

Term life insurance is usually bought because most people are under the impression that life insurance is only good when someone dies. It is generally bought with an attitude of “if I have to”. Consequently, most don’t know about the utility of permanent life insurance.

With permanent options, you have a cash value component that grows, which term life insurance does not have. If you cant pay for a certain time with a permanent policy then you can elect to get the cash value back or have it create a term policy to maintain some coverage.

The only way to get anything back from a term policy is to have a return of premium rider that will kick it at the end of the term, be it 10, 20, or 30 years. The only other time to get money back is during the free look period, or within the first month after applying.

What happens when a term life insurance policy matures?

Maturity dates for life insurance are set only for permanent life insurance, whole life, universal life, etc. When a life insurance policy reaches its maturity date then it is canceled and the maturity value is sent to the policyholder. Since term life insurance is temporary it does not mature.

Current life insurance policies are using the maturity date of anywhere between age 100 and 121. Older life insurance policies mature at 80-90 years old. If you are older and want to extend your maturity date then you may be able to get a maturity extension rider. Check with your carrier to see if it can be extended, sometimes they require it years in advance.

Summary

Term life insurance is made with a set time period in mind where you’ll have protection in the event of death. A term policy would then pay your beneficiary a certain death benefit amount. If you outlive your life insurance it will end, no coverage will remain, premiums will stop and if you have a return of premium rider then all premiums will be sent back. Other than that the only thing that happens is a notice in the mail.

Most insurance carriers provide the option to convert a term policy to permanent whole life insurance and/or to renew it at a higher premium. Either option avoids underwriting including a medical exam and health questions.

If you find yourself near the end of your term, send us a request to look at your options.