What happens at the end of your life insurance term?
When you secured your term life policy, you probably didn’t think about what would happen at the end of your term. If you are close to the expiration of your life insurance policy, you may not know what to do. To ensure that you are making an informed coverage decision, here’s what you need to know about the end of your term life insurance policy.
Expiration Doesn’t Mean What You Might Think
First, it’s important to explain what “expiration” means in terms of life insurance. As you approach the end of your term, you don’t need to worry about your policy simply ending. If you look at your policy, you will see a table that shows your insurance cost on a year to year basis. This table typically shows the cost of your insurance for years after your term ends. For instance, if your term length is 20 years, then this chart will still show your insurance cost on the 21st, 22nd, and the following years. Essentially, your coverage does not expire after your 20-year term ends. What does end at the 20-year mark is the premium that you locked in when you first secured the policy. So, while you can keep your coverage after your term ends, you will have to pay drastically higher premiums for this coverage until you cancel the policy or open a new one.
Steps to Take at the End of Your Term Life Policy
- Shop for a New Policy
If you still need life insurance coverage as the end of your term approaches, then you need to start shopping for a new policy. You should begin this process as soon as possible because securing a new policy will require you to take several steps. For instance, you will have to compare rates and pass a medical exam before securing the coverage you need. So, start this process before your term ends so you can maintain continuous coverage when your policy expiration date does arrive.
- Cancel Your Term Life Policy
If you do not want to pay high life insurance premiums, then you need to cancel your policy when your term ends. Failing to officially cancel your policy will leave you financially responsible for the premium payments. If you do not call your insurer to cancel, your policy can actually remain active until you are 95.
These are some of the things that you can do when your term life insurance comes to an end. Do you have additional questions regarding your life insurance? If so, then contact the experts at Udell Family Insurance. We are ready to assist you with all your coverage needs today.