Navigating the End of Your Term Life Insurance: Top 3 Strategies to Consider.
Secure Your Financial Future When Your Term Life Insurance Policy Reaches Expiration.
Term life insurance provides coverage for a specified period, usually 10, 20, or 30 years. As the end of the term approaches, policyholders may be concerned about how to maintain financial security for themselves and their families. In this article, we will explore three options to consider when your term life insurance is about to expire.
Convert to a Permanent Policy
One option is to convert your term life insurance policy to a permanent policy, such as whole life or universal life insurance. These policies provide coverage for your entire lifetime, as long as premiums are paid. Converting your policy allows you to maintain coverage without going through the underwriting process again.
Statistically, only about 1% of term life insurance policies result in a death benefit payout, as most policyholders outlive the term. By converting to a permanent policy, you can ensure that your premiums will eventually provide a benefit to your beneficiaries, regardless of when you pass away.
Renew Your Term Life Insurance Policy
Another option is to renew your term life insurance policy for an additional term. This allows you to maintain coverage for a longer period without converting to a more expensive permanent policy. However, premiums for renewed term policies are typically higher, as they are based on your age and health at the time of renewal.
According to LIMRA's 2018 Insurance Barometer Study, 63% of American households own life insurance, and 33% of those who have coverage say they need more. Renewing your term life insurance policy can help you maintain adequate coverage to protect your family's financial future.
Purchase a New Term Life Insurance Policy
If your health has not significantly deteriorated since you initially purchased your term life insurance policy, you may be able to secure a new policy at a lower premium than renewing your existing policy. Shopping around for a new policy allows you to compare rates and coverage options to find the best fit for your needs.
The National Association of Insurance Commissioners (NAIC) reported that in 2019, the average annual premium for a 20-year term life insurance policy with a $250,000 death benefit for a healthy 30-year-old was $160. As you age, the cost of purchasing a new policy will increase, so it's essential to weigh your options carefully and consider factors such as your health, financial situation, and coverage needs.
In conclusion, it's crucial to plan ahead and consider your options when your term life insurance policy is nearing expiration. Whether you choose to convert to a permanent policy, renew your term policy, or purchase a new policy, taking action before your coverage expires will help ensure continued financial security for you and your loved ones.