Let's start with the basics. What does having life insurance really mean?
Life insurance is a contract between you and an insurance company, where you pay regular premiums, and the insurer provides a death benefit to your beneficiaries upon your passing. This benefit can help cover funeral costs, debts, and living expenses.
There are different types of life insurance, such as Term, which covers you for a specific period, and Permanent, which lasts through your entire life. Term life insurance commonly has a 10, 20, or 30-year duration.
When a term life policy ends, you have several options. You can renew the policy, though premiums will likely increase due to age. Alternatively, you might convert it to a permanent life insurance policy or purchase a new term policy. If you don't need coverage, you can let the policy expire.
So, what's better to choose from? Let's explore all of these options in detail.
This choice allows you to extend your coverage beyond the initial term. You get continued financial protection but should expect higher premiums due to your increased age.
Buying a new term policy can provide lower initial premiums than renewing. The one thing to consider carefully is the premiums will be based on your current age and health status, so they can be higher.
That's when you switch from term life to whole life insurance without a medical exam. You can get lifelong coverage and, in some cases, an option to build cash value. But don't forget that permanent policy rates could be higher than your original term policy.
You might let your term policy expire if you no longer need the coverage. For example, your dependent children are grown up, and you no longer need to provide for them. Or, you have accumulated sufficient savings and assets to cover final expenses.
Summing up: to decide what to do next, you should sit down and count approximate premiums for renewing your policy, getting a new one, or converting it to a permanent plan. A licensed life insurance advisor can be a great help here, saving you time.
What influences your actual rates?
For no medical life insurance, it's your age, gender, smoking status, and your answers to a health questionnaire, if there is one. Don't forget that the coverage amount you choose impacts the size of your premiums, too. You can use our Coverage Calculator to see how much coverage you need.
If a life insurance policy ends, beneficiaries need to know the following:
- The policy no longer provides a death benefit, meaning no payout will be made.
- Some policies might have a small cash surrender value. Check with the insurance company if there are any remaining benefits.
- There may be options to renew the policy or to convert it to a permanent one.
- The insured person should inform beneficiaries of any new or additional policies he has taken out to replace the expired one.
If you are a beneficiary and need the coverage to be continued, discuss obtaining a new policy or other financial protection options with the policyholder. You can also consult with a licensed advisor to explore alternative strategies for financial security.
To keep your financial stability, protect your loved ones in the face of life's uncertainties, and avoid any misunderstanding with beneficiaries, we recommend making these tips your habits:
▪️ Regularly review and update life insurance coverage.
This proactive approach helps to ensure the policy remains aligned with changing life circumstances, such as marriage, having children, or career changes.
▪️ Plan ahead for the end of coverage.
You can not prepare for the unexpected, but you can remain insured. Learn possible options and choose your best way to maintain financial security and peace of mind as the policy term approaches its conclusion.
▪️ Consult with your life insurance advisor.
Life insurance can seem messy with all its variable plans, rules, and conditions. But the light side is that your insurance advisor is always here for you, ready to answer any questions, clarify the small print, and find the perfect-suited solution individually.
▪️ Maintain open communication with beneficiaries.
Explain all the details of your life insurance policy to the beneficiaries, starting from how it works. They have to be prepared to handle the claim process smoothly. This transparency helps avoid confusion and stress during emotionally challenging times.
The fact that you are wondering what to do when your term life insurance policy ends is already an indicator that you are a responsible policyholder. Keep it up!! Taking proactive steps to manage your life insurance policies helps to secure your financial future.
It's crucial to regularly review and update your coverage to align with life's changes, such as marriage or having children. Plan ahead for the end of your policy to avoid any gaps in protection. Last but not least, maintain open communication with your beneficiaries.
If you need professional advice or to review your current policy, you can contact our licensed life insurance advisors here.
