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You bought life term insurance over a decade ago, and it’s probably about to expire, and you’re wondering what to do! Your life has most definitely changed a little bit over the last 10-20 years, and you are thinking about the kind of coverage your family needs now. Is it possible to extend your policy, and is it necessary? Well, this article will explain what your options are and what to do when term life insurance expires:

What is term life insurance- and what happens if it expires?

Life term insurance is an incredible, flexible insurance option. You can choose your coverage amount, the term length, and what happens when it ends. While whole life or universal life insurance policies offer permanent coverage, life term insurance will be for a limited period, usually between 10 to 30 years. Typically, when your existing life term insurance expires, you have the option to convert to permanent or long-term coverage or extend the coverage by renewing it again at the end of your term, depending on your needs and preference.

Renew your current term policy

By default, your life term insurance will automatically renew every year until you’re over 95 years old. Most term life insurance comes with a renewability feature to extend coverage- and death benefits- without getting in a new contract or going through another medical exam. However, your insurer will likely raise your premium if you choose to extend the coverage. Some people will want to go with this option, but it’s not often the best choice for many people. You can notify your insurance service provider if you do not want to renew your term life insurance.

Advantage: The renewability feature enables you to extend coverage without going through another medical exam. This can benefit a person diagnosed with life-shortening or terminal illness, as they may fail to qualify for other policies that offer sizeable death benefits.

Disadvantage: As mentioned earlier, the insurance company may raise premiums after your term expires.

Convert to a longer-term or permanent policy

If you want coverage that lasts longer, you can convert your coverage to a longer term that lasts more than a decade or a lifetime. Different companies have different ways of dealing with this transition, so you need to look at your policy keenly to see how it would be beneficial to you:

Some insurers will only allow you to transition to a universal life policy and not a lifetime policy.

Some may have time restrictions; they allow converting at any time, while others won’t permit it during the first couple of years. Converting to a longer-term or permanent policy can be a good option, but it should be thought through well in advance before your coverage expires- at least a year prior.

Advantage: This option allows you to get a permanent policy without necessarily having to provide proof of insurability or going through a medical exam. If you’ve been diagnosed with chronic (not life-shortening condition necessarily), it’s more affordable to get long-term coverage than a term life policy extension.

Disadvantage: Many companies offer limited options for permanent policy options

Expiring Life Term Insurance

Get a completely different policy

Life might have changed a lot over the years. You’ve probably gained more financial stability. Your needs and those of your family have evolved, different life dynamics have shifted, and you don’t need the same amount of coverage. The policy that was appealing for you 10-20 years ago may not be an ideal choice right now—and the best way to fix that is to get a completely different policy.

Advantages: The main advantage of this option is that you can get the amount of coverage that resonates with your needs. If your life has changed drastically over time, you can adjust your death benefits accordingly. You can also choose to have the same death benefits as that you had before— it’s your choice.

Disadvantages: You have to provide proof of insurability by going through a new medical exam. Even if you still do not have any life-threatening condition, you can expect that you’ll pay a higher premium because you have fewer years to live. However, that doesn’t discredit the fact that this might be a cost-effective option.