What Happens if I Outlive My Term Life Insurance Policy?

What if I outlive my policy but still want coverage?

If your term life insurance policy is ending and you want to continue to make sure your family is protected, you have some options,

You can convert the policy into a permanent one.
You can renew your term coverage.
You can buy a new policy.

Converting Your Policy

Many term life insurance policies have a conversion rider automatically included. The rider would ensure you can convert your term policy regardless of your age or health status as long as you convert before the deadline.

The benefits of converting a term policy:

You don’t have to go through underwriting or take a medical exam.
You maintain the original health rating from the term policy.
You can decide when and how much of the coverage to convert.
You can opt to have life insurance coverage for your entire lifetime.

If you decide to convert, your premiums will increase drastically. You’ll no longer have a term policy, but a permanent policy.

A conversion option is typically only taken advantage of if your health has declined and you’re no longer insurable otherwise.

If you’re interested in converting, be sure to check the conversion expiry date listed on your policy.

Renewing Your Policy

Another option is to renew your term policy. Many insurance companies have renewability options on their term products. This means you can extend the coverage term year after year without having to re-qualify.

For example, let’s say you purchased a $500,000 20-year term life insurance policy when you were 30 years old. Your annual cost is $244.

You’re now 50 years old and your policy is set to expire this year. You can choose to renew the policy to extend the coverage another year. This means you’ll keep your $500,000 in coverage but you’ll no longer qualify for the $244 annual premiums. The renewal premiums jump to $2,989 annually for the 21st year. Each year you renew, these annual premiums will increase.

The benefits of renewing a term policy:

Allows you to reclaim your coverage at the end of your initial term.
Allows you to keep the original face value amount (or death benefit) of your policy.
Permits you to renew your term life policy without having to start the application process again.
Exempts you from answering medical questions or undergoing a medical exam to prove insurability.

Similar to converting, people don’t typically opt to renew their policy unless they are only given a short amount of time left to live due to terminal illness.

Buying a New Policy: A More Affordable Option

You don’t need to be terminally ill to realize you want more life insurance coverage. Perhaps life didn’t go as planned and you’re still paying off large debts or your children aren’t quite financially independent yet. Or maybe you and your spouse bought a vacation home and you want to cover that new mortgage. No matter the reason, sometimes buying a brand new policy is the best way to continue being insured.

Converting and renewing policies can be quite expensive. Before going either of these routes, try applying for a new term life insurance policy. It’s likely going to be the less expensive route, even if a health issue or two have popped up over the years.

You don’t need to get the same policy as you had before or even work with the same insurance company. A different insurance company may offer better rates than your current one. Get a range of quotes in different term lengths and coverage amounts until you find a price you’re comfortable with.

No one ever anticipates needing to use life insurance, but if the unexpected happens make sure your loved ones are protected. Be prepared and get a free and anonymous term life insurance quote today.