Is your term life insurance coverage period approaching? You still have several options to consider if you want to remain insured. The first thing to know is, term insurance doesn’t just expire so your coverage doesn’t automatically disappear.
Your term life insurance policy won’t disappear after the term ends, but the fixed premium will no longer hold. Your premiums will jump significantly, and will continue to go up every year as you age. You have several options about how to go forward if you want to remain covered.
- Get a new term policy
- Convert your term policy to permanent policy
- Convert your policy and then sell it
- Continue with your policy and pay the higher premiums
Which direction you go will depend on your circumstances.
Scenario One: You are seriously or terminally ill.
Converting your term policy to a permanent policy, if your coverage allows conversions, is probably the best solution. It can be expensive, but for you and your family it will be fairly temporary so it is still a good investment. With conversions:
- No proof of good health is required
- You can have the same death benefit or reduce it
Be sure to make the conversion before the term policy is set to expire, because you won’t be able to convert after the fact. Also, some providers won’t let you convert your policy to permanent once you reach a stated age, so check your policy or with your provider and be sure to convert before that cut-off.
Scenario Two: Your health is fairly poor.
Conversion is probably still your best way to go, because of the no-exam or proof of health provisions. If you can bring down your death benefit it can help reduce your premium.
Scenario Four: You’re in fairly good health.
If your income isn’t just social security, applying for a new term policy may be a good option. Depending on your age at the end of your new term, you’ll probably qualify for less coverage than you have had. Check with your current provider and shop around for better options.
Scenario Three: Retirement is coming up and you have a pension.
Well before you retire, review your insurance options and pension elections, or considerations. Keep in mind that you will need an approved life insurance offer before your retirement date, and if you have any past health issues it can take a year or more to receive the insurer’s decision. If your health is poor, policy conversion is still your best option.
Learn more about the different types of term insurance on our EInsurance site for a better understanding of which might be best for you. You can also use our quote tool to explore your provider options.