Term life insurance is an excellent financial planning tool, especially for those looking for flexible options. Before comparing term life insurance quotes, you’ll first want to consider how it fits into your lifestyle, including what will happen at the end of that term.
The Lowdown on Term Life Insurance
Not sure just how whole or term life insurance works? Don’t worry – we’ve got you.
You will have two primary options when purchasing life insurance: whole or term.
Whole life insurance
Just as the names suggest, the whole life insurance policy will cover your entire life span from the point of purchase until your death. Whole life is often referred to as a permanent policy, suggesting that the policy follows you from start to finish.
Term life insurance
On the other hand, term life insurance is a policy that is effective for a pre-determined length of time. The length of the term will depend on the life insurance company, your life circumstances, your budget, and more relative details.
Which Is Best for You: Whole or Term Insurance?
This question can’t be easily answered without looking at your unique needs and wants. However, a term policy may be best suited for younger individuals with changing circumstances, like a growing family.
Term policies can also be great for someone with a smaller budget who desires life insurance but doesn’t want to pay astronomical prices for it.
On the other hand, if you’re set in life and don’t anticipate much change, a whole policy may be the option for you. Benefits of the whole life policy include the cash value, which you may be able to borrow against but beware of higher premiums and stricter guidelines for approval.
What Happens When a Term Life Insurance Policy Ends?
If your term life insurance policy expires while you’re still alive, you’ll have several options to work through.
Letting the Policy Expire
If you’re finished with the policy and no longer want to have a life insurance policy under the same circumstances (maybe your new employer sponsors a life insurance policy as a benefit), then you can simply let the plan expire. If the life insurance company reaches out to you about extending, let them know you’ll be ending services at the end policy date.
Ask for an Extension
If you’re happy with your current policy and simply want to buy more time, ask your insurance company for an extension. This may be as simple as tacking on a few months or may require thorough renegotiating, depending on the company. Make sure you’re prepared with any necessary documents to help make that process as smooth as possible!
Converting the Policy
If you’re hoping to trade in your term policy for a whole life policy, you’ll need to contact your insurance provider. They’ll be able to navigate your options, including if your current term policy has a conversion rider clause, giving you a direct transition to whole policies without jumping through all the hoops.
Be sure to compare the term life insurance quotes with whole ones to be sure the company is offering a good deal.
Shopping Around for a New Policy
Searching for insurance alternatives is never fun, but it’s something you’ll need to do if you hope to purchase new coverage. Carve out some time to look for new rates and companies, comparing both whole and term life insurance quotes in the process.
The Bottom Line
What happens at the end of your term life insurance term is ultimately up to you and your personal situation. If you like where you’re policy stands at the end of the term, you can keep everything the same and extend it for a longer term. Depending on where you’re at in life, you may decide to jump to a new term policy or opt for a whole policy.