Term life insurance policies are cheaper than whole life policies. They have a finite term, which means they eventually expire. Sometimes, things don’t work out and you can’t keep making the payments.
If your term life policy is ending, you may still need life insurance protection.
- You have house payments
- You have other major debts
- You have children who are depending on you still
- You have a partner who relies on your income
- You want to leave money to your heirs
If you fit into one of these categories, there are a few options you may have.
Consider buying another term life insurance policy
If you still have obligations, then the best option for a reasonably healthy person is to buy another term life policy. You might have to pay a higher price, because you’re older, but buying a short term like 5 years, or 10 years, rather than 20 years, can definitely help lower the cost of the life insurance policy.
Shopping can also help. There are MANY search engines, and new tech platforms that force different life insurance providers to compete for the best possible rate on your next life insurance policy. It’s possible on your next life insurance policy you could even get better life insurance rates.
-Keep in mind you’ll need to answer health questions, and also take a medical exam during the process.
Take it slow
Rather than buying a new term life policy for 5-10 years at one, you could be opt for an annual renewable term life insurance, where you can decide each year whether to continue paying for it. This is a great choice if you only have a few more years of major financial obligations. The main reason this is a bad idea is because the rates can jump year to year. An alternative to annual renewable term life, is asking if you can extend your current policy one year at a time. This will let you avoid new medical exams, but the price might jump a lot. This could also be a great option for someone with a terminal medical condition, who needs life insurance.
Convert the term policy to permanent life insurance
Term life insurance is best for most people. Having said that, permanent life insurance has advantages too. Permanent life insurance, will last the rest of your life. It also cost more than term life. There are many types of permanent policies, like whole, universal, and variable life insurance.
If you need coverage after the term life policy expires, your carrier might give you the option to convert it into a permanent life insurance policy. They might even let you do this without a new medical exam, or answering health questions.
You might be able to convert only a portion of the death benefit, meaning you’d have a lower benefit once the term policy ends.
Many companies let you convert term life to whole life insurance, which comes with a fixed premium, ROI, and death benefits. Some allow conversion to universal life insurance, which has flexible premium payments, and also allows for changes to the overall benefit.
This can make sense in a lot of situations if you can afford the whole life. If your term life polciy allows conversion, there’s a deadline for conversion before the end of the policy. There’s also an age – typically 75. The new permanent life premium typically gets higher every year that you don’t convert. If you convert only a portion of the coverage amount to a permanent policy – this can help you save money as well
Another great solution is buying a new permanent life insurance policy
If you decide you want to buy a permanent life insurance, converting it to a term life policy is a great idea. If you’re in good health, it might not be the cheapest route – but it is possible. We recommend you get quotes for a new permanent life insurance policy first. Don’t just convert it with the existing carrier. You should get quotes from other options. Each carrier has different health and underwriting guidelines, and another carrier could be a better fit for you.
Most people who need life insurance coverage are better off buying a new term life insurance policy.