When your original term life insurance quote expires, there are a few avenues you can take—keep reading to find out how to make the right choices
Term life insurance plans are excellent options for protecting your family members in the event of your passing. But, the catch with term life insurance is that the term eventually expires. If you are close to reaching the end of your term life insurance plan or your term life insurance policy has already expired, you likely have a lot of questions regarding next steps. Well, you’re in luck! Today, we’re going to be exploring all of the different avenues that you can take to protect your loved ones after your insurance plan has expired. We’re going over everything from finding a new life insurance quote at an older age to policy conversion. Keep reading to find out how you can maintain peace of mind even after your life insurance policy has expired.
Option #1: Renewal
Instead of immediately searching for a new term life insurance quote, you can take steps to renew your existing policy
Your insurance company may offer you the option to renew your policy.
Depending on your coverage requirements as you age, one of the easiest ways to maintain coverage is by renewing your current policy. Most insurance companies will offer you an option to extend your current coverage without any gaps. This is probably the most seamless way to keep coverage after your life insurance policy has expired. The downside of renewing your life insurance policy is that you can expect your premium to substantially increase. This depends on your age and the amount of coverage that you purchased.
While renewing your life insurance policy may be easy, it is not usually the most cost effective option. Because of this, it is recommended that you shop around for other term life insurance quotes before making your final decision.
Option #2: Get a New Term Life Insurance Quote for a Different Plan
By exploring new term life insurance quotes, you can adjust your options to suit your current priorities
Consult a financial advisor if you aren’t sure about life insurance next steps.
While it may be tempting to renew your policy, it is often more beneficial to shop around and compare rates for other term life insurance policies. Since you are at a different stage of your life than when you purchased your old plan, you will need to make some adjustments to ensure that your plan is still working for you. Many older people consider adding a death benefit to their plan while cutting down on their total coverage amount. For younger people who still need to pay off mortgages and send children to college, a larger amount of monetary coverage is definitely needed. For people who already have children out of the house and some major expenses paid off, less coverage is needed.
If you aren’t sure how much coverage you need for your next term life insurance policy, then we recommend contacting a financial advisor for a bit of assistance. By consulting a financial advisor, you can feel more confident in the alterations you make to your new life insurance plan.
Option #3: Get a Quote for A Permanent Life Insurance Policy
Permanent life insurance stays with you as long as you continue to pay the premiums
Permanent life insurance never expires.
Another alternative to renewing your current life insurance plan is to search for a permanent life insurance policy. Permanent life insurance, unlike term life insurance, never expires. Many older people prefer to purchase a permanent life insurance plan because they don’t need the death benefit and are able to pay a higher premium. Since permanent life insurance never expires, you can expect to pay a much higher premium than you previously did with your term life insurance plan.
A permanent life insurance policy also has the added benefit of accruing cash value that can be used during the policy holder’s lifetime. Most commonly, the cash value can be used to cover medical expenses or extended care facilities. If a permanent life insurance plan sounds like the right option for you, you should begin comparing quotes so you can get the best possible monthly premium.
Option #4: Convert Your Current Policy
By converting your term life insurance into permanent life insurance, you can maintain the same amount of coverage without an expiration date
Turn your term life insurance into permanent life insurance.
If you are interested in a permanent life insurance policy once your term expires, but want to guarantee the same amount of coverage, you can convert your policy. Not every insurance company provides this option, so you want to check with your provider and get some more details before making your final decision. If your policy is convertible, you will be able to maintain your same amount of coverage indefinitely and begin to accrue cash value.
Another important thing to remember about convertible policies is that there are sometimes additional rules for conversion. For example, some plans may only allow you to convert your policy before a certain age or before your term expires.
Option #5: Purchase a New Renewable Life Insurance Policy
While renewable life insurance will give you peace of mind, it does come with a high price tag
Renewable life insurance gives you the option to renew yearly.
For some people, the right choice for their loved ones is to extend their life insurance policy for just a few more years. While this is certainly an option, it is one of the most expensive options when it comes to monthly premiums. Renewable life insurance is a type of insurance that is usually renewed each year as the policy holder requires. If you feel you need coverage for the next few years, this is a viable option. However, when the renewal date rolls around, you may find that the monthly cost of your policy has greatly increased. In most cases, you will be able to get the same amount over coverage at a lower price by finding a short term life insurance policy.
Option #6: Layering Insurance Policies
By combining term and permanent life insurance policies, you can customize your insurance coverage
Layering insurance policies could be the right option for your unique needs.
The last option we’re discussing today is layering policies. Your insurance policy needs to work for you, and sometimes a single policy isn’t enough to provide the necessary amount of coverage. In this case you can layer policies and choose the different coverage options you need to suit your financial situation. Depending on how you want to use your death benefit or whether or not you want your policy to accrue cash value, you might find it beneficial to layer your policies to take advantage of the characteristics of both term and permanent life insurance policies. The downside of layering policies is—once again—the cost. Though it is worth it for some to mix and match their policies, this is usually not the best option for those looking for a low monthly rate.
If your term life insurance policy is expiring soon, we definitely recommend taking a minute to explore your options for continued coverage. Be sure to do your research and make sure that you are taking the right steps for your future. If you’re not sure which path to take, we recommend contacting a financial advisor for professional advice.