One benefit of term life insurance is that you only buy as much as you need. However, this means that eventually, the policy will expire, and you’ll be left with several options as that expiration date approaches.
If you bought your term life policy to last as long as specific financial obligations, such as paying off a mortgage, you may no longer need life insurance coverage by the time your policy expires. However, circumstances change, and you may realize you still need coverage once your policy ends. Let’s walk through what happens when your term life insurance policy ends and the different options available to you.
What happens when your term life insurance policy runs out?
It’s important to remember that term life insurance policies don’t technically expire—your premiums do. After your term ends, you can usually keep your policy on a year-by-year basis, but the rate you pay will be much higher than what you originally agreed to.
The good news is that you have several options to maintain coverage other than renewing your existing policy at a higher rate, including purchasing a new term life insurance policy or converting your existing policy into a permanent one. The right option will vary depending on your specific needs and situation, so let’s walk through the process for each to learn which makes sense for you.
Get a New Term Life Insurance Policy
If you’re relatively young and healthy, you may consider buying a new term life insurance policy altogether. This option makes the most sense if you still have dependents or ongoing financial obligations, like mortgage payments. Your rates will likely be higher than the rates you were paying for your expiring policy, but purchasing a shorter term can help keep the cost more affordable. You’ll also have to undergo the life insurance application process again, but this can be a good opportunity to shop around for different carriers and plans to make sure you’re getting the most affordable coverage for your needs.
Convert Your Term Life Insurance Policy into a Permanent Life Insurance Policy
You may be able to convert your term life insurance policy into a permanent policy before it expires. This means the policy will cover you for the rest of your life, but keep in mind there may be a limited amount of time in which you can make the conversion, so don’t wait until the last minute to explore this option. Converting your policy lets you skip the underwriting process and medical exam, and you may even be able to keep your original rate, regardless of your current health status. Therefore, converting could be a good option if there have been changes to your health since you purchased your term policy.
Renew or Extend Your Expired Term Life Insurance Policy
If you missed the window to convert your term life insurance policy into a permanent policy, you still may have the option to renew your policy without undergoing a new medical exam. Your premiums may increase significantly each year, but this could be a good option if you only need a few more years of coverage or have a medical condition that could affect your eligibility for a new policy.
Connect with SelectQuote on Your Life Insurance Options
If you have a term life insurance policy that’s expiring, it’s important to know all your options so you can make the right decision about how to proceed. Luckily, SelectQuote is here to help answer any questions you have about life insurance. We’ll gather a variety of unbiased quote comparisons from different carriers, helping you navigate your options to ensure you have the coverage you need at a price you can afford.
