Term life insurance can help financially protect your family if you pass away within the term period, as long as your premiums are paid. It's one of the more affordable ways to get coverage, with term lengths usually lasting 10 to 30 years, unlike permanent insurance, which lasts your entire life. Your beneficiary receives a death benefit if you have an active contract and pass away before the end of the period. You may have purchased a term life contract years or even decades ago. And now, as you're approaching the end of the coverage period, you want to know what happens when term life insurance expires. Here are some questions that are probably top of mind:
Will you still have coverage?
No. When your term life insurance ends and you're still alive, you've outlived the contract. You no longer have the
Do you need to cancel your term contract?
If you decide not to extend your coverage (or if it isn't an option for your current contract), you don't need to do anything before the contract ends. On the end date, the contract expires.
You may cancel your term life insurance contract any time before the term ends. Often, unlike with some permanent insurance contracts, you don't have to pay surrender charges or cancellation fees. But, unless you cancel within the specified "free look" period of coverage (usually at the start of the contract), you don't receive any refunds for canceling.
How far in advance should you look for new life insurance coverage?
If you're thinking about extending coverage or getting a new contract, begin looking around six months before the end of your term coverage. You may need time to determine
How much life insurance do you really need?
Options after your term life insurance ends
You have a few options when you outlive term life insurance coverage. Before deciding, speak with your family and consider your needs. There's no correct answer; it's what works best for your financial situation. Here are the different paths you could take:
Renew your term life insurance
Sometimes, life situations change, and you may need to
If you can renew, it's often on a year-to-year basis up to a certain age, which may be well into your 90s. Continuing coverage keeps your
However, your insurer may increase your premium each year you extend. Depending on coverage costs, your budget and if your death benefit needs have changed, it may not make financial sense to renew year by year. Instead, you may want to purchase a new contract.
Convert your term contract to permanent coverage
If your contract allows, you may be able to
Converting your coverage before the end of a term life contract has a few benefits. Your premiums are based on your age at the time of conversion, so in this case, the earlier the better. You also may not need a medical exam, which could be helpful if your health has deteriorated. Plus, a new permanent contract can cover you for the rest of your life.
If you're considering a
Buy a new term or permanent contract
When your term life insurance ends, purchasing a new term or
You might find better value in a new term contract if you're younger and healthier, getting continuing coverage at more affordable rates. If you're an older adult or have health concerns, permanent coverage offers a lifelong safety net but typically at a higher premium.
Also, consider your future financial commitments because that can affect the coverage you need. Are you closer to retirement or just starting to build a family? Different life stages can impact the type of contract and amount of financial protection you need for your loved ones if you pass unexpectedly.
Go without life insurance
Going without a life insurance contract may be an option you're comfortable with if your financial obligations don't require it anymore. If you're older, don't have anyone depending on your income and don't have debts, you may not need a life insurance death benefit.
You may be able to purchase final expenses insurance or funeral coverage instead to help cover those costs so your loved ones don't have to pay out of pocket. Or you might buy a life insurance contract with a smaller death benefit to help them cover those expenses.
However, if you have family or others who rely on your income, not having life insurance could leave them vulnerable. They may not have the resources to cover expenses like housing payments or child care costs without your financial contribution. The income coverage offered by some employers, while affordable, often isn't enough.
Get help with the next steps
Deciding what to do at the end of a term life contract is a big decision that should align with your financial needs and life goals. Whether you opt for another term contract or convert depends on many factors.
Going without coverage can expose your family to financial uncertainty, so consider aligning your life insurance strategy with both your current circumstances and your future needs.
A financial advisor can help provide tailored advice based on your personal needs, financial obligations and long-term goals. Connect with a