What To Do When Your Term Life Insurance Expires
Whether you choose a shorter 10-year term or a longer 30-year term life insurance policy, many changes can occur in your life during that period.
As your term life insurance approaches its end or has already expired, it’s an ideal moment to reassess your current needs. Consider whether you require more or less coverage and whether a term or permanent life insurance policy is best suited for you.
The crucial question to ponder is: if you were to pass away, what to do when your term life insurance expires? Keep reading to explore all your options and gain valuable tips on applying for life insurance.
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What happens when your Term Life Insurance expires
Once your term life insurance policy ends, you lose coverage in the event of your passing, leaving your beneficiaries without financial protection.
Upon expiration of your term life insurance, it’s crucial to re-evaluate your insurance needs and determine the appropriate coverage amount, as circumstances may have changed since your last policy.
Options following the end of your life insurance policy include extending your current coverage, converting to a term-100 policy, or exploring alternative insurance options like different term policies, permanent policies, or no-medical or guaranteed life insurance.
Extend or renew your existing policy
Extending or renewing your term life insurance allows you to maintain the same term length and coverage as your expiring policy.
This option is ideal if you require the same level of coverage, prefer non-permanent solutions, and are satisfied with your current policy. However, it’s essential to assess your coverage needs when initiating or renewing any life insurance policy.
To extend or renew your current term life insurance, check if your policy or insurer offers this option. Keep in mind that age restrictions may apply based on the term length, and not all insurers provide extension or renewal options.
Convert to a term-100 policy
If your coverage requirements remain constant, and you prefer a fixed premium for lifetime coverage, converting to a term-100 policy may be suitable. A term-100 policy ensures coverage for life with a guaranteed premium that remains unchanged.
Explore alternative insurance policies
If renewing your policy isn’t your preference, consider exploring other life insurance options tailored to your needs. Understanding the various types of insurance, such as term life, permanent life, simplified life, and guaranteed or no-medical life insurance, can facilitate decision-making.
Consult a life insurance agent to explore your options and find a new policy post-expiration.
Get a quote from Sure Insurance today to to know what to do when your term life insurance expires.
Insurance options and their pros and cons
When it comes to insurance, the choices can feel overwhelming. But fear not, as we’re here to guide you through the maze of options, helping you find the perfect fit for your needs.
Life insurance offers peace of mind, providing a tax-free lump sum to your beneficiaries if you were to pass away. There are various types to consider:
Term Life Insurance
Term life insurance offers affordable coverage for a specific period, typically 10, 15, 20, 25, or 30 years. Your premiums remain fixed throughout the term, making it ideal for covering mortgages, debts, or providing for your family in the event of your passing.
Pros:
- Fixed premiums for the duration of the policy
- More affordable than permanent life insurance
- Guaranteed death benefit
Cons:
- No cash value
- Limited to a set term period
Permanent Life Insurance
Permanent life insurance, also known as whole life insurance, covers you for your entire life. While premiums may fluctuate based on your health, this type of policy builds cash value over time and guarantees your premium won’t increase.
Pros:
- Builds cash value over time
- Coverage lasts a lifetime
- Fixed premiums for life
Cons:
- Generally more expensive than term life insurance
Simplified Life Insurance
Simplified life insurance offers a hassle-free application process, without the need for a medical exam. It’s an excellent option for those with health conditions who may have been denied traditional coverage.
Pros:
- No medical exam required
- Fast approval process
- Accepts some health conditions and risky lifestyles
Cons:
- Limited coverage compared to traditional policies
Guaranteed or No Medical Life Insurance
These policies are designed for individuals with serious health issues or hazardous occupations. They provide coverage without the need for a medical exam, making them accessible to those who may have been denied traditional insurance.
Pros:
- No medical exam or questions asked
- Accepts all health conditions and lifestyles
- Fast approval process
Cons:
- Limited coverage compared to other policies
Additional Coverage Options:
Disability Insurance
Disability insurance complements life insurance by providing income replacement if you’re unable to work due to illness or injury.
Critical Illness Insurance
Critical illness insurance offers a lump sum payment upon diagnosis of serious illnesses, helping you cover medical expenses and other financial obligations.
At Sure Insurance, we understand the importance of finding the right insurance solutions for your unique needs. Let us help you navigate your options and provide you with peace of mind for the future.
Why should I get life insurance?
Life insurance isn’t a one-size-fits-all solution. It’s essential to evaluate your personal circumstances before deciding if it’s right for you.Â
If you lack dependents, debts, or financial responsibilities, life insurance may not be necessary. However, if you have loved ones or financial obligations you’d like to protect, it’s worth considering.
Life insurance serves a crucial purpose: providing a tax-free payout to your chosen beneficiary if you pass away during the policy term.
This payout can be utilized for various needs, including covering living expenses, funeral costs, outstanding debts like mortgages or educational loans, or even sustaining a business.
Secure your future with Sure Insurance and know what to do when your term life insurance expires.
Why you should consider Critical illness insurance
Critical illness insurance offers a distinct advantage known as the ‘return of premium.’ This feature allows policyholders to reclaim all premiums paid after a set periodâusually 15 to 20 years, or upon reaching ages 65 or 75âprovided they remain healthy and haven’t made any claims.
Imagine having coverage for an extended period, with the assurance of receiving 100% of your premiums back if you stay healthy and don’t make a claim.
Additionally, critical illness insurance includes a partial payment benefit, sometimes referred to as an early discovery benefit.
Should you develop a non-life-threatening illness while insured, you’re eligible for a partial payout, typically ranging from 10% to 25% of your policy’s value. Importantly, this payout doesn’t void your policy or reduce future payouts if you later develop a defined life-threatening illness.
Qualifying illnesses for partial payments often include certain non-life-threatening cancers and coronary angioplasty, though specifics may vary by insurer.
Further enhancements, known as riders, can be added to critical illness policies, such as a disability waiver of premium rider, a second event rider for additional coverage in case of a second critical illness, or a loss of independent existence rider.
Critical illness policies are typically offered for terms of 10 or 20 years, up to age 75 or 100. As with life insurance, shorter terms tend to be more cost-effective, and some insurers allow policyholders to lock in premiums to avoid future rate increases.
Despite the popularity of a $100,000 face amount for critical illness policies, it’s essential to note that not all policies are the same. Different insurers offer various features, with some providing unique benefits tailored to specific needs.
For instance, Manulife Insurance offers LivingCare, which includes a monthly care benefit for functional dependency at no extra cost. Ivari offers competitive rates, but only as a rider to life insurance.
Desjardins Insurance provides shared ownership of critical illness policies, offering coverage and the potential return of premiums for key employees without tax implications.
Why you should consider Disability insurance
Disability insurance steps in to replace a significant portion of your income if you’re unable to work due to injury or illness. It offers consistent monthly payments during your recovery or until the coverage period ends, whichever comes first.
Similar to critical illness insurance, the benefit from disability insurance can be used as needed, with the monthly payment structure designed to mirror your paycheck. This ensures coverage for essentials like rent, mortgage, and living expenses while you’re unable to work.
Long-term disability insurance, in particular, is a common choice. While it may not replace 100% of your income, it provides essential financial support over several years to mitigate the impact of a disabling condition.
At Sure Insurance, we understand the importance of protecting yourself and your loved ones from life’s uncertainties. Get a quote today and secure peace of mind for tomorrow.
Finding the best coverage for a life insurance policy
Determining the optimal coverage for your life insurance policy is the pivotal step in initiating your insurance journey. The extent of coverage hinges on various factors, including your health status and existing medical conditions, which significantly impact the policies available to you.
For individuals in good health with minimal medical concerns, coverage exceeding $1,000,000 is feasible.
Conversely, those grappling with severe health conditions might find their coverage capped between $25,000 and $1,000,000, contingent upon the gravity of their ailments. Such circumstances may categorize you as high risk in the eyes of life insurance providers.
Grasping the significance of the coverage amount is paramount; it represents the death benefit disbursed to your designated beneficiaries in the event of your demise.
Determining the appropriate coverage necessitates a comprehensive evaluation of your financial standing. The coverage should be sufficient to address all potential expenses your family might encounter following your passing.
The quantum of life insurance coverage is deeply personal, tailored to your individual requirements. Contemplate what aspects you would wish to safeguard for your loved ones and beneficiaries in the event of your untimely demise.
Considerations such as lost family income, outstanding mortgage obligations, expenses for post-secondary education, and provisions for dependents form integral components of the evaluation, following the DIME formula outlined below.
Frequently Asked Questions (FAQs) about what to do when your term life insurance expires
What happens when term life insurance expires?
When a term life insurance policy expires, coverage ends, and the policyholder is no longer protected. There’s typically no payout unless the policy includes a return of premium feature or if the insured passes away during the policy term.
What happens to money after term life insurance expires?
If the insured outlives the policy term, the premiums paid towards the term life insurance policy are not returned. However, some policies offer a return of premium option, where premiums paid are refunded if the insured survives the term.
What do I do when my term life insurance expires?
When a term life insurance policy expires, you can either let the coverage end, explore options for renewal, or purchase a new policy, depending on your insurance needs and financial situation.
When term life insurance expires, do you get money back?
Typically, no. Unless the policy has a premium return feature, there’s no money back if the insured outlives the policy term.
What should I consider when buying life insurance?
Consider factors like your financial obligations, dependents, income, and future needs when buying life insurance. Assessing these can help determine the appropriate coverage amount and type of policy.
Will I be covered after my term life insurance expires?
No, unless you renew the policy or purchase a new one, coverage ends when a term life insurance policy expires.
If I want to get the same term life insurance, should I get the same coverage?
It depends on your current financial situation and insurance needs. You may choose to maintain the same coverage or adjust it based on changes in your circumstances.
Can I get a second life insurance policy or get more coverage?
You can purchase additional life insurance coverage, either through a second policy or by increasing the coverage amount on your existing policy, depending on your eligibility and the insurer’s terms.
Can You Extend Term Life Insurance?
Some insurers offer the option to extend or renew term life insurance policies, but it’s subject to terms and conditions and may involve higher premiums.
Do I need life insurance if I have no dependents?
While life insurance is commonly used to provide for dependents, it can also serve other purposes, like covering funeral expenses or leaving a legacy. Whether you need it depends on your individual circumstances and financial goals.
Which type of life insurance policy is better: term or permanent?
The best type of life insurance policy depends on your financial goals and circumstances. Term life insurance offers temporary coverage for a specific period, while permanent life insurance provides coverage for the insured’s lifetime and may include cash value accumulation.
What happens if you don’t renew your term life insurance?
If you don’t renew your term life insurance, coverage ends, and there’s no payout if the insured passes away after the policy expires.
Does term life insurance automatically renew?
It depends on the insurer and policy terms. Some term life insurance policies may automatically renew for another term, while others require active renewal or conversion to a permanent policy option.
Get a quote from Sure Insurance today to secure your family’s future with peace of mind.
