When you initially bought your term life insurance policy years ago, you probably weren’t thinking about what you were going to do when it expires. The next thing you know, your policy is approaching expiration and you’re not sure what to do next.
Ideally, you bought your term life policy to last as long as your financial obligations so that you no longer need life insurance coverage when the policy expires. Unfortunately, life doesn’t always work out as planned and you may be realizing you still need coverage as your policy approaches expiration.
What happens when your term life insurance policy runs out?
First, it’s important to understand what happens when your term life policy “runs out” or “expires.” Term life insurance doesn’t necessarily expire—what does expire is the rate that you were paying. After the term period, you usually can continue your policy on a year-to-year basis but at much higher premiums.
Luckily, there are a few options to get the coverage you need after your term policy runs out.
Get a New Term Life Insurance Policy
If you are relatively young and still in good health, buying a new term policy is potentially a good option for you—especially if you still have mortgage payments or dependents. Your rate might increase considering your age but you may be purchasing a shorter term which can help lower the costs. You will also have to go through the application process again, but with life insurance rates at a 20-year low1, it is a good opportunity to shop around and see what your best options are.
Convert Your Term Life Insurance Policy into a Permanent Life Insurance Policy
Many term life policies allow you to convert your policy into a permanent policy before your term actually expires. This could be beneficial as a permanent policy remains in force for the rest of your life, but there may be a limited amount of time in which you can make the conversion. Converting your term policy lets you skip the underwriting process and medical exam, and oftentimes keep your original rate, regardless of your current health status. While permanent policies are more expensive than term, converting could be a good option for you if there have been changes to your health since you originally purchased your term policy.
Renew or Extend Your Expired Term Life Insurance Policy
If you missed the opportunity 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 will likely increase substantially each year, but this could be a potential option if you only need a few more years of coverage or have a medical condition that could make it difficult to apply for a new policy.
Connect with SelectQuote on Your Life Insurance Options
It’s important to know all of your options when it comes to life insurance, and at SelectQuote, we can answer your questions, provide unbiased price comparisons and serve as a resource to make sure you’re getting the most out of your coverage. Learn more about your options and get a free quote today.