Term life insurance is one of the most straightforward and affordable types of coverage available: you choose a set term (often 10, 20, or 30 years), and your premiums remain fixed for that period. But what happens when that term runs out? Does your coverage simply disappear? Can you renew it?
If you’re approaching the end of your policy or recently received notice that your term is expiring, here’s what you need to know about your next steps, and how to make sure your protection doesn’t lapse when you need it most.
1. Your Coverage Ends When the Term Does
When a term life policy reaches its expiry date, your coverage ends automatically unless you take action to renew, convert, or replace it. This means your beneficiaries would no longer receive a payout if something were to happen after the policy’s end date.
For many people, this expiration coincides with a major life milestone – paying off a mortgage, nearing retirement, or children reaching financial independence – which might mean your original coverage needs have changed.
2. Option One: Renew Your Term Policy
Most insurers allow you to renew your policy for another term, though the premiums will increase. Why? Because your age and health risks have changed since you first purchased the policy.
The good news: renewals generally don’t require new medical exams. The less-good news: your cost can jump significantly. A 45-year-old renewing a policy purchased at 25 may see premiums double or even triple.
If your goal is to maintain short-term protection – for example, to cover debt or provide income replacement until retirement – renewal might still make sense.
3. Option Two: Convert to Permanent Coverage
If you want lifelong protection, you may be able to convert your term policy into a permanent one (like whole or universal life) without a medical exam. This is often the best option for people whose health has changed or who want to build cash value as part of their financial plan.
Permanent insurance costs more but offers stability, estate planning advantages, and guaranteed coverage for life, which can be invaluable for those who want to leave a legacy or cover final expenses.
4. Option Three: Apply for a New Term Policy
If you’re still in good health, applying for a brand-new term policy can sometimes be cheaper than renewing your existing one. You’ll need to go through underwriting again (which may include a medical exam), but this can give you access to more current rates, updated coverage options, and multi-policy discounts.
This approach works well for younger clients whose financial responsibilities have shifted or those who only need coverage for a few more years.
5. Option Four: Let the Policy Expire
In some cases, letting your policy lapse may actually make sense. If your mortgage is paid off, your dependents are financially stable, and your savings or investments can cover final expenses, you might no longer need life insurance at all.
Still, this decision should be made carefully because once the policy expires, you lose the guaranteed insurability that came with it. Starting from scratch later in life often means higher rates and stricter medical requirements.
How a Broker Can Help You Decide
Navigating your options at the end of a term life policy can be confusing, but you don’t have to do it alone. A licensed broker can:
- Compare the cost of renewal versus buying a new policy
- Explain your conversion options and any deadlines
- Review how your coverage needs have changed
- Recommend products that align with your budget and goals
They’ll ensure you maintain protection without paying for more coverage than you need.
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When your term life insurance ends, you have more options than you might think; from renewing or converting, to reapplying or walking away. The right choice depends on your health, finances, and what stage of life you’re in.
If your term is ending soon, our team can help you explore your best next steps and make sure your coverage keeps up with your life. Get in touch with us, today.
