Options When Your Term Life Insurance Policy Ends

Whether it's your favorite chocolate pie, dream vacation or honeymoon, every good thing eventually ends. The same principle also applies to your term life insurance policy.

Most term life insurance policies last for 10 to 30 years. Check your policy or talk to your agent to see how long of a term you chose when you purchased your policy. If you die before the policy expires, your beneficiaries receive the death benefit. If the policy expires before you do, you will no longer be covered. That's when you need to decide your next move.

Convert the Policy

Most term life insurance policies that were issued in the past decade include an option that allows you to convert or exchange it to a permanent life or Universal Life policy. Depending on your company, you may be able to convert the entire policy before it expires, during the first five years in which the policy is in effect or before you reach a certain age, which is typically 70. Converting your policy is a smart move if your health has declined and would prevent you from obtaining a new permanent policy. However, this option is more expensive than a term policy and may not be available depending on your current term policy.

Extend the Policy

Read the fine print on your term life insurance policy to see if you can pay the premiums each month and keep your current coverage until you're 95. This option is beneficial if you only need coverage for a few more years or if you're over 70 years old and cannot qualify for a new policy because of health concerns. It's a bad idea if you cannot afford the steep increase in premiums, which will go up annually.

Renew the Policy

After your term policy expires, apply for a new one. Use your current insurance company's Exchange or Re-Entry provision or select an entirely different company. You'll need to prove that you're in good health before you receive a new policy, which is affordable in most cases, especially if you're under 60 years of age. You may be denied coverage or charged a high premium, though, if your health is in decline.

Even if your term life insurance policy has expired or is close to expiring, you have options. Check into these three options, talk to your agent for more information and shop around for the best insurance policy for you.
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