Does renewing my life insurance policy make sense?
If your term life insurance policy is about to expire, you’re probably wondering what your options are. After all, your circumstances may have changed since you first purchased the policy. If your current policy is still a good fit for your needs, you have the option to simply renew your coverage. But how do you know if renewing is the right option for you?
In this article, we’ll walk you through the details of renewing a term life insurance policy and the pros and cons of renewing your coverage. We’ll also help you understand other coverage options if you decide not to renew your term life insurance policy.
What are the options when your life insurance policy expires?
Whether you had a 10-, 20- or 30-year term life insurance policy, the coverage will eventually come to an end. If you find yourself in this position, it’s good to know what your options are for renewing or finding new coverage. You typically have three options when your life insurance policy expires:
Renew the policy. If you’re still happy with the amount of coverage your life insurance policy offers, it may be most beneficial to renew your policy. Many policies have an automatic renewal option, but in the case that it does not, we can help get you connected to your carrier to ensure your policy will roll over into a new term.
Apply for a new policy. You may choose to apply for a new life insurance policy with a different carrier if your current coverage no longer meets your needs. You may also choose to switch to a new policy type, such as final expense insurance—also known as burial insurance—when your life insurance runs out. Our team of licensed insurance agents can help you navigate this process, considering your current needs and options for coverage.
Let the policy expire. If you no longer need term life insurance, you can choose to let your policy expire. This would typically happen if you no longer have debt or big payments that your previous policy would have covered in the event of your passing, but having some level of coverage can typically be in your best interest to ensure your loved ones are supported financially.
Pros of Renewing Your Life Insurance Policy
There are several pros to renewing your life insurance policy. One of the greatest incentives is that you do not need to undergo a medical exam when you renew a life insurance policy.
Reasons to renew your life insurance policy include:
Your current policy is still sufficient for your needs
You had a change to your medical history or health that would make it difficult to qualify for a new policy with another carrier
The most common policies that get renewed are for a 10-year term, 15-year term or 20-year term. Some term life insurance policies have a specified age of expiry, so make sure you know the details of your policy if you decide to renew.
Cons of Renewing Your Life Insurance Policy
While renewing life insurance can be the right option for many people, there still may be negative aspects that you should consider. The biggest con of renewing your life insurance is that the premium could be significantly more expensive than when the original policy was purchased. Because a medical exam isn’t required when renewing a policy, your insurance carrier no longer has updated proof of you being in good health, and they will likely adjust your premium accordingly.
Reasons not to renew your life insurance include:
You can’t afford to pay a higher premium for your policy
Your current policy may no longer be sufficient for your needs (for example, you want to either extend or shorten the term of your life insurance, or switch to a different type of policy entirely)
Need help deciding if it makes sense to renew your life insurance? Let SelectQuote help you make the best decision for you.
Renewing your life insurance policy is a big decision, but our licensed insurance agents are here to help. SelectQuote has more than 35 years of industry experience helping customers navigate the life insurance buying process. Our process is quick and easy, using proprietary technology to search life insurance policies from the highly-rated carriers we work with. Whether you have questions about renewing your current policy or want to explore options for switching coverage, we’ll help you find the right fit for your needs and your budget.
