Choosing the right life insurance is a critical tool needed to provide for your loved ones, and knowing the type of insurance that will offer the best protection for your dependents is one of our jobs at Independent Insurance Associates. You may think you have done all your research, but what if you outlive your term life insurance policy? Do you have options for extending or converting to another policy? We cover these questions and offer a quick review of term life insurance below.
How Does Term Life Insurance Work?
Term life insurance provides coverage for a limited amount of time and is important for building your estate. The terms typically range from 10 to 30 years and can be renewed if needed. If you die within the named period, your beneficiary receives a payout to help with expenses. If you outlive the term, the insurance company pays nothing. Term life policies are ideal for people that only need life insurance for a specific number of years.
This type of insurance coverage is also beneficial for individuals that have loans or mortgage debt. Whatever your situation, the most important thing to consider when you are purchasing term life insurance is the timing. Be sure that your policy end date corresponds with when your beneficiaries will no longer rely heavily on your financial support.
Should You Buy More Life Insurance When Your Term Life Policy Expires?
If you outlive your term life insurance, it is probably time to reassess your financial obligations and needs. When you set up your original policy, you had a plan in place to provide for your loved ones should you die. The term of your policy will likely cover housing and education expenses for your partner and children. It is essential to plan ahead if you wish to buy a new policy or convert your existing policy to a whole life insurance plan.
You will need to make these decisions at least six months before your original policy expires to prevent any gaps in coverage. Many insurance companies offer better rates if you convert to a new type of policy in a timely manner. Remember, term life insurance is not an investment; there are no refunds or cash-out options when your policy expires. Your expiration date is exactly that. If you die one day after your policy expires, no death benefit is paid to your beneficiary.
What Options Do You Have If You Outlive Term Life Insurance?
Depending on where you are in your financial life, you have options when your term life policy ends. One is to renew your term life policy before it expires. Your premiums will go up due to age calculations, but you may decide to go with a shorter time frame which will cost less. You may want to convert your policy to whole life insurance, as choosing this type of protection will last you the rest of your life and guarantees a death benefit to your beneficiaries. Some policies offer term life insurance plans with the return of premium, including the expected higher costs. Making the next steps should be strategic and life insurance questions should be discussed with your agent to ensure you choose the most effective policy for your money.
Your Independent Insurance Associates agent will be happy to guide you and answer your questions about life insurance. Preparing for the future of your loved ones is vital for peace of mind. Whether it is time to renew a policy or make serious changes to your life insurance coverage, we are here to help. Contact us today to start planning for the next steps in protecting your beneficiaries.