Throughout the duration of your term life insurance policy, you’ll be paying monthly premiums to keep your cover active.

However, does term life insurance expire? And what happens to your premiums when the policy expires? At the end of the agreed policy term, your cover will end and all premiums will have been paid. If you outlive your policy term (an agreed set period of time), the payout is obsolete and your life insurance cover will end. 

Where Does Your Money Go?

When you pay your life insurance premiums, you’re essentially sending your money to a metaphorical bucket that is handled by your insurers. When your insurance company needs to payout to a family, they will take it from that bucket.

Therefore, if you pass away during your agreed term, then the insurer will go into the bucket which others have been paying into and payout to your beneficiaries.

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Continuing to Be Covered

You essentially have 4 options if your term life insurance is coming to an end but you still want to be covered:

Renew The Policy

Renewing your policy is a smart choice if you’re in poor health. You’ll still be guaranteed coverage but you will be paying higher rates. Insurers will base their premiums on risk, renewing your coverage 10 years later than your original plan means that you’re closer to the end of your life, therefore they’re more likely to have to payout. If you outlive your policy, your payout is cancelled. 

Buy A New Policy

If you’re in good health and still young, buying a new term life insurance policy may be the best option for you. This will more often than not cost less than converting to a permanent policy. Some might even want to consider purchasing some life and critical illness cover, to provide an additional financial safety net over a set period of time.

However, it does mean you’ll need to complete another application for cover, as your insurer will need to check your medical history to make sure you’re not a high risk for them. You may also need to undergo a medical screening or nurse appointment before your insurer can offer you policy terms. The insurance provider will keep you informed of any underwriting requirements for your new policy every step of the way. 

With this option, you’ll need to figure out your financial responsibilities all over again. If you did this 20 years ago, then circumstances will have changed. Your mortgage may have been paid off, or your children may not be dependent on you anymore are just a couple of examples.

It might be worth shopping around before buying off the same insurers as you may be able to save money - if you need some help with this process why not consider speaking to an expert insurance adviser here at Cavendish Online.

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Convert To Permanent Life

Some policies may allow you to convert to a permanent plan (whole-of-life). If you decide to convert, you will have higher premiums due to the fact that your beneficiaries are guaranteed a payout. If you have a decent budget and can afford the premiums, then converting to permanent might be a good choice.

Drop Life Insurance

We’re not saying that this is a wise choice because it isn’t. However, if you have managed to save enough money over the course of your term life plan that you can support your family once you’re gone, then dropping life insurance may be an option.

We advise giving this a huge amount of thought though, as you want to leave your loved ones with enough support when you pass away.

If you want to talk your potential options through with an expert insurance adviser, then consider getting in touch with the Cavendish Online Advice department

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Our team of expert protection consultants are here to help. Call for a quick quote and more information now: 

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