What happens if you outlive your term life insurance policy?
Answered by 6 licensed agents
Outliving your life insurance is not a bad thing. However if a need is still there for it the cost will skyrocket after the term is over. In many case once the term is over not as big of a benefit is needed. Which is why when buying a term policy when you are young is good but also having a small permanent policy that is paid for in 15-20 years along with the term is a good idea.
If you outlive your term life insurance policy, the coverage simply ends and no death benefit is paid. Depending on the policy, you may have the option to renew it, convert it to a permanent policy, or purchase a new policy.
The overwhelming majority of term life policyowners do outlive their policy. And, ultimately, that's a good thing because you stayed alive! But term life should be seen as a complement to a whole life policy, or as a temporary need anyway (i.e between jobs, while children are growing, when there's a mortgage).
But because term life policies aren't cash value products, you don't normally get something after the term ends.
Two things to keep in mind: term policies can often convert to whole life policies (and you may not have to go through underwriting again), and some carriers offer 'Return of Premium' riders where, by outliving the term, you receive a percentage of the premiums back.
When your term policy ends, the coverage simply ends—unless it has a conversion option. If it does, you can convert it into a permanent policy, like whole life or universal life, without taking another medical exam. That means even if your health has changed, you can still keep life insurance for the rest of your life. The tradeoff is that permanent coverage costs more than term insurance, so the premium will usually increase.
Term insurance is like renting a house, you can use it for a term(period of time) and then you walk away with nothing. It is important to contact a qualified broker who can see if you have any options. Some policies allow you to purchase additional insurance no matter your health condition.
A term policy terminates upon the last day of the term period. You have rented a death benefit for the prescribed term, i e. 15 years, 20 years, etc.). You do have the option with most policies to convert any or all of the coverage to whole life while the policy is still in effect and the rate you will pay is the determined by the age you are at the time of conversion.
However, once the term period of coverage ends you have no coverage from that policy going forward.
