A term insurance policy offers life coverage for a specific term. During the tenure of your policy, if in any unforeseen situation where you lose your life, the family members receive a sum-cover. After the tenure of your policy ends, the coverage also expires. Usually, people allow their term insurance to expire post-tenure when they have no dependents and no debts. Apart from that, most people prefer to take other steps when their term plan ends.
What can you do when your term insurance expires?
When your policy is nearing its end, here are some choices you can make apart from discounting it-
Convert your term policy into a permanent life policy
Several term insurance policies these days come with a conversion plan. When your term policy has a conversation plan, you can convert the term plan into a permanent policy. In simple terms, the meaning of term insurance is that it is for a specific tenure while permanent life insurance offers life cover until the demise of the policyholder. Usually, for the conversion, you need to submit evidence of insurability, which means you may have to get a medical check-up done before the conversion. Insurance companies have different ways of handling the conversion process and it is important to be aware of that beforehand to see what choices exist. For example, some companies allow you to convert only to a universal life policy, some insurers allow you to convert only until a specific time of the insurance plan, some allow the conversion only till a specific age, or some allow you to apply for the conversion within the first few years of your term plan. Hence, when you are browsing through different plans, using the term insurance premium calculator, and filtering your options, ensure that you are well aware of the conversion terms and conditions beforehand.
Extend your current term plan
You can simply choose your current term policy instead of searching for new insurance plans after your policy expires. Technically, most of the term plans can be renewed on a year-to-year basis until the age of 95. Most term plans come with guaranteed renewability features. When you renew your term plan, you can extend your coverage and existing health benefits. Also, since you are continuing with an ongoing plan, you do not have to go through the whole underwriting process again or get medical tests done. However, as you have aged since your first policy, your premium is likely to have increased when you extend your term plan. Several people opt for the renewability feature of term insurance plans, as it may be the only way to have insurance despite changes in the policyholder’s health. As if the policyholder is diagnosed with any critical illness like cancer, they may not be eligible for a new policy. Hence, extending their term policy would be the only way to provide cover to their loved ones.
Buy a new life insurance policy
When you would have bought the term plan, say 5 years or even 30 years ago, your life would have been different. As the years pass, your priorities change and so do your financial goals. You may have more savings and may not need much cover like earlier. Or on the contrary, you may have more dependents now and the term cover is insufficient. Depending on how your life has changed, the existing policy may not benefit you. Instead, after your life insurance expires, you can simply buy a new insurance policy of any type you like. When you opt for a new policy, ensure that you check the different options available and use tools like a term insurance premium calculator to make an informed decision. This is the most affordable option to go for when your term plan expires. Also, since you are buying a new plan altogether, you can increase or decrease the coverage according to your needs. However, you may have to get new medical tests done, and based on your current health, your premium would be calculated.
Always seek the opinion of an insurance expert, be it directly talking to your company’s representative, agent, or broker before extending or converting your term insurance plans. Also, apart from the term plans, there are other types of life insurances available too. Research about them, find the cost involved and see what options apply to you particularly.