Can I Extend My Term Life Insurance? Here’s All You Need To Know
Lots of people ask us if term life insurance is extendable, typically during annual policy reviews. However, our answer to them is a big no.
Our life insurance quotes are of various term lengths, mostly from 10-30 years. We understand that there may be budgetary concerns, but we always let the clients know that longer terms are more beneficial and less expensive in the long run.
A useful piece of advice for everyone would be to purchase the longest term available for your age.
What if Term Life Insurance Ends?
When your term period ends, you can choose to continue paying premiums. However, these premiums would have gone up significantly. Therefore, it is always better to choose longer-term insurance.
Longer-term insurances ensure that you lock the rates when you’re younger. Practically, it’s cheaper to get a 30-year policy when you’re 25 than getting a 10-year policy at 50.
Get a New Policy
If you’re reaching the end of your short-term policy, there’s one most basic option for you; buying a new policy. In that case, you’ll have to re-apply and go through the whole process again.
In general, this would be the best choice for the majority of people. Term life insurance is typically purchased by those who do not wish to own lifelong life insurance. They are aware of the risks and benefits.
If your health hasn’t deteriorated dramatically, you can still get a decent deal on a term policy and have the peace of mind that your family will be safe.
Another option is to continue paying the premiums on your current policy. However, this option will cost more, so buying another policy is always better.
Convert Your Policy
As the insurance industry evolved, converting your term life insurance policy into a permanent policy was possible. Conversion can help you in the scenarios where you find your policy ending. Check if your policy has the conversion option and if there are some specific guidelines regarding the conversion.
Some policies allow conversion on a period basis, while some on a specific age basis. Some policies give you an open hand too. It’s always best to know your policy completely before paying for it.
Renewable Term Life Insurance
Another option is renewable term life insurance. In simpler words, you can call it an extension of your term life insurance policy. However, you need to add it to your policy at the time of buying the policy.
This option may sound compelling, yet buying a new insurance policy is still a more cost-efficient option.
Still, if you’re facing significant changes in health, the “renewable” option may benefit you more. Because people with poor health-class ratings are very less likely to get approved in a new policy, and even if they do so, the premium would be prohibitive.
Sell Your Policy
Selling your Term Life insurance policy as it is nearing the end of its term is probably the worst decision you can make.
Permanent life insurance with a cash value is preferred by most individuals and institutions who purchase life insurance contracts. This reduces the value of a term life insurance policy at the end of its term.
Buy a New Permanent Life Insurance Policy
This isn’t ideal because you could have taken advantage of the lower premiums you were given when you were accepted for your term policy if you were to buy a permanent life insurance policy. Whether prejudiced or not, underwriters favor younger and healthier individuals.
Endnote
When your term life insurance policy is coming to an end, you must understand all of your choices and the next steps you’ll need to take. All four of these alternatives are far superior to the option of being uninsured!
