What Happens At The End Of Term Life Insurance

Understanding What Happens At The End Of Term Life Insurance

Many people purchase a term life insurance policy because they have a life insurance need which extends 5 years, all the way to 30 years. Although this does not seem like short term, it is considered a temporary, or term life insurance policy. As humans, we are typically procrastinators so many people do not think what happens at the end of term life insurance since it is so far away.

Proper life insurance planning is not just about today. It is about your future.

Term life insurance fills the life insurance gap for a specific number of years and is great at filling temporary solutions such as:

Income Protection

Mortgage Protection

Business Obligations

Educational Costs

Final Needs

Term life insurance is there for the what if's and will provide the safety net your family needs in the worst case scenario.

The good news is, statistically most people will never need to use their term life insurance policies because they will go on to outlive their policy. So the majority of people will be left asking what happens at the end of term life insurance.

Premium Increases

One of the things we can all agree upon is that time flies. One day you are purchasing a 20 year term life insurance policy, and the next day you are receiving notice of your premiums increasing because you are a month away from your 20 year policy anniversary.

This is the moment when most people reach out to us, because they are facing a premium which is 10x more expensive than what they have been paying over the past 20 years.

The easiest answer to what happens at the end of term life insurance is very large premium increases. For most people these premium increases are so drastic they are no longer to afford paying for the policy. This is the point exactly, as life insurance carriers want you to stop paying for this policy and get a new one.

At this point you have a few choices. You can:

Pay the much higher premiums which will continue to increase (not recommended in most cases)

Obtain a new life insurance policy

Convert your existing policy to a permanent life insurance policy

Drop coverage completely

For many people conversion is a very attractive option in order to have a permanent policy for later in life.

Conversions

Many (not all) term life insurance policies have conversion options. Conversion options allow you to make some, or all, of your term life insurance into permanent life insurance. Most policies have a conversion period in which you can complete this process without going back through underwriting.

We recommend those who are considering a permanent life insurance policy convert their policy before the end of the term. The younger you are, the cheaper your permanent life insurance will be.

A great solution to this is to own a term life insurance policy to fill the void with the best bang for your buck. The term life insurance will cover your temporary solutions. Couple a permanent life insurance policy with your term and you now have a solution which will last you the rest of your life.

Deciding upon which option for you will work best for what happens at the end of term life insurance is not always an easy solution. With some proper planning you can be sure you do not get stuck in a situation where you are uninsurable and have no affordable options available. We can help you evaluate what will work best for you and your situation. Filed Under: Life Insurance Decreasing Term Life Insurance Explained Cavalcade Of Risk #208

What Happens At The End Of Term Life Insurance