You were prudent – you thought ahead to protect your family by purchasing a term life insurance policy. But whether your term was a single decade, 30 years, or somewhere in between, you're about to outlive your term life insurance policy.
With most conventional term life policies, you don't need to do anything at the end of the term. You stop paying the premiums, and the insurance company stops offering coverage. But what happens next?
Let's explore your options for when term life insurance expires.
1. Renew your term policy
Your current life insurance provider may offer you an opportunity to renew your term life policy. Sometimes, the company makes the transition seamless, extending the same benefits without a new underwriting process or medical exams. You may be considerably older than the first time you purchased, so your premium may jump higher—sometimes substantially so.
Given its simplicity, renewing your term may appear to be an attractive route. Still, wisdom suggests looking at other options before finalizing your decision on extended term insurance.
2. Invest in a new term policy
Starting over with a new term life insurance policy provides you the opportunity to explore options for the terms of your policy. Investing anew allows you to shop around for providers to reassess your needs.
It's a good idea to reconsider the death benefit amount, term length need, and your ability to pay premiums. You're older than when you bought your first term policy, so expect a higher premium rate if you're going for the same death benefit and term length. But your life situation has likely changed, so the premium could become more affordable if you don't require the same level of coverage or the same amount of time.
Purchasing a new term life policy may still fit your family's situation. Explore what term life insurance can mean for your family.
3. Invest in a permanent policy
If you don't want to worry about term limits and want to ensure that a death benefit remains in place, no matter your age, a permanent policy provides that security. With whole life insurance (the most common form of permanent life insurance), these policies offer coverage if the premiums continue to be paid.
These policies tend to be popular with those in retirement age who don't need as substantial a death benefit and can afford the premiums. Some permanent policies even accrue cash value that can be drawn from while the policyholder is still alive. Learn more about how whole life insurance works and if it fits your needs.
4. Convert your term policy
Converting your current term policy to a permanent one may prove attractive for those who've changed their situation over the term. This option won't be available to everyone, but just like extending your term policy, a conversion offers a way to keep your same insurance without starting anew. Note that Ethos does not offer convertible policies, but customers do have the option of purchasing a new term or whole life policy after their term policy expires.
A permanent policy will last the remainder of your life with no term limits, so the premiums often come higher than a term policy. If you're interested in a conversion, check your current term policy soon, as some policies only allow the conversion in a preset window of coverage and before you reach an age limit.
5. Consider long-term-care or end-of-life policies
Perhaps a conventional term life insurance or whole life policy isn't for you. You may want to consider some of the more targeted plans designed for specific life scenarios. One example includes policies that feature long-term-care coverage.
If you're current on your premiums, these policies allow you to use your death benefit for long-term care while you're still alive. Another option involves policies designed to cover end-of-life expenses so your family isn't burdened with the cost. Your specific situation may warrant a look at some non-traditional options.
Although Ethos doesn't offer policies specific to long-term care or end-of-life, our policies give beneficiaries the ability to use your funds however they choose upon an insured individual’s death.
6. Purchase a renewable policy
If you think that you want life insurance coverage for just a few more years, you can take it year by year. An annual renewable term life insurance policy offers coverage one year at a time, allowing you to rethink your decision each year. While this may seem like a great concept, the premiums can jump mightily at your annual renewal date.
If you think life insurance coverage for more than just a few years is in your family's best interest, consider first exploring a term life insurance policy that comes with a set premium. Ethos’ term insurance policies include a set term with a fixed premium, so there's no need to worry about your annual life insurance expenses increasing during the term of the policy.
7. Layer policies
By layering both term and whole life policies, you could find a mix-and-match option that works for your family. Maybe you have a window of time in which you need a more significant death benefit in place, but you still want to lock in premium rates on a whole life policy. In this situation, you may be able to afford whole life sooner because of the smaller death benefit, and invest in a more considerable term life death benefit due to the shorter term.
There isn't always a one-size-fits-all approach to life insurance, so consider all your options, even if that means piecing together different solutions and layering policies.