What Happens to Term Life Insurance If You Don’t Die
Option #2: Your policy converts to annual renewable.
If your term life insurance policy has the option to convert to an annual renewable term policy, great! Some policies will do this automatically, but others will require action on your part to make this happen. It all depends on your insurer and the specific policy you bought. You’ll have to take a look at your policy documents (or call your agent) to learn more.
Converting your policy to an annual renewable term has its benefits. The most important benefit is continued coverage. If something happens to you, you’re still insured. Your beneficiaries will get that income-tax-free death benefit – which is the whole reason you purchased life insurance, right?
But there is also a drawback…and that’s the cost. Because you’re older now than when you first bought your policy, the renewal price is going to reflect that. And it’s going to reflect it every year upon renewal. If you’re on a tight budget, this isn’t an ideal long-term solution. In a pinch, however, it may work while you figure out how to get more coverage at a better price.
If you only intended your coverage to last through a specific time – such as the length of a mortgage or your working years – you may only need a couple more years of coverage. In that case, you’ll have to weigh the option of paying more for a few yearly renewals against the option of getting a new policy for the duration of your financial need. If that’s the case, we’re happy to help! Let us get you a new, current quotes so you can see if a new policy is more affordable than your renewal. Click here to get a fast, free quote!
Summary: If your policy converts to an annual renewable, what happens to term life insurance if you don’t die? In this case, you still have coverage that’s guaranteed for a year at a time. However, every year, you’ll pay more to keep that coverage in force.
