When you buy a term life insurance policy, you purchase it for a set term. You pay the premium and your family gets the complete benefit in the event of your death.
But what happens when the policy expires?
Even if your term life policy is ending, you may still need some sort of insurance protection. Especially if you have house payments, have dependent children, or have major debts.
Here are some options for you to consider:
Buy another term life policy
If you’re reasonably healthy and still have some financial obligations, buying another term life insurance policy is the best option. But as you’ll be older now, you might have to pay a higher price. Though buying a shorter term such as for 5 or 10 years could help lower the cost.
There’s also the chance of getting a better life insurance rates than your former insurer, you just have to shop around. Just keep in mind that you’ll probably have to answer health questions and take a life insurance medical exam during the application process.
Take it year by year
If you’re not interested in buying a new term life insurance policy, you could opt for annual renewable term life insurance, where you decide each year whether to continue coverage or not. This is the best choice for people who have very few financial obligations.
However, the rates can jump quite a bit each year so there’s that. Alternatively, you can ask your agent if you can extend your current term policy one year at a time turning your policy into an annual renewable term life – it’s the best option for people with terminal medical conditions who need life insurance at any cost.
Convert your term policy to permanent life insurance
It is well known that term life insurance is the best choice for many people, permanent life insurance does have certain advantages. Although it costs much more than term life, permanent life insurance lasts for the rest of your life – it includes whole, universal, and variable life insurance.
Your insurance provider may offer the option to convert your term life to a permanent life insurance policy — without taking a new medical exam or answering health questions again.
Most carriers allow you to convert term life to whole life insurance, which has a fixed premium, the investment return, and death benefit. While some may allow conversion to universal life, which offers flexible premium payments and permits changes to the benefit amount. It all depends on your insurance provider.
Although there’d be a deadline for conversion and age cut off, usually 75.
Be sure to browse around or consult an agent to better understand your next step.