What Happens if You Outlive Your Life Insurance?
We all know the value of having life insurance in New Brunswick. It’s essential to ensure that your loved ones will be taken care of after you’re gone, whether it’s to help cover the mortgage or replace your lost income.
But what happens if you outlive your life insurance? You may have bought term insurance for a set period — such as 20 years — and now your term insurance is set to expire.
When that happens, you will no longer be covered under your old life insurance policy. That doesn’t mean that you can no longer have life insurance; It means that you will need to get a new policy.
We’re here to answer any questions you may have about life insurance. We can tell you:
- What will happen to your premiums when your policy expires
- How to determine if you still need life insurance
- How to get a new life insurance policy – either term or permanent (also known as whole life)
We’ll also tell you about how Archway Insurance is here to help you with all your life insurance needs.
What happens to my premiums when the term policy expires?
When you reach the end of the term of your life insurance policy, you will no longer be required to make payments, also known as premiums, to your life insurance company. It also means that you no longer have coverage. The insurance company will keep all of the premiums you’ve paid them.
If you outlive your life insurance, you will not get your premiums refunded. It’s the same as with other insurance: You pay for coverage if something happens but don’t receive a refund of your premiums if nothing happens.
Do I still need life insurance if my term policy is expiring?
To determine whether you’ll still need life insurance after your current policy expires, think about your current financial responsibilities.
If you die, do you have people in your life that could be adversely affected? For example:
- You have large unpaid debts such as a mortgage or car loan.
- You have dependents that depend on your income, such as a spouse or children.
- You run a business with a partner that could be impacted by your death.
If any of this applies to you, you should think about getting another life insurance policy.
If you are now at a stage in life where your bills are all paid, and no one is dependent on you financially, you may not need to get a new life insurance policy. If this is the route you decide to take, you can simply make your last payment and then let your policy expire. When your policy expires, your coverage will end.
How do I get a new policy if my old life insurance policy is expiring?
If your life insurance policy is expiring, you have two options, depending on your age and health. You can either convert your term policy into a permanent one — also known as whole life — or get another term life insurance policy.
The majority of term life insurance policies have a built-in rider referred to as a term conversion rider. That gives you the option to automatically convert your policy from term to permanent when your term policy expires — regardless of your age or how your health is. There are several advantages to converting to permanent insurance:
- You won’t have to take a medical exam.
- You have control over how much of the original policy you want to convert.
- You now have lifetime coverage.
One thing to keep in mind is that your premiums will likely go up if you convert from term life insurance to permanent insurance.
If you are still young and in good health, you may prefer to buy another term policy. The easiest option is to renew your current term policy. That means you can extend your coverage terms without having to re-qualify.
The benefits of renewing a term policy are:
- No medical exam is required.
- You can keep the same coverage as your original term policy.
- You don’t need to go through the application process again.
What happens after your life insurance ends?
Determining what kind of life insurance you need can be confusing, but it’s an important decision to make, and we’re here to help you with it. We’ve covered the following things you need to know about life insurance:
- That you do not get your premiums back once your policy expires
- What you need to think about to determine if you still need life insurance
- What the differences are between permanent (whole) life and term insurance are