Does Life Insurance Expire?

Life insurance can expire, but whether it does depends on the type of policy you have. There are two main types of life insurance: term life insurance and permanent life insurance. Each type has its own rules regarding coverage duration, and understanding these differences is crucial when choosing the right policy for your needs. Let’s dive into the details of how and when life insurance might expire.

Term Life Insurance: Yes, It Expires

Term life insurance is designed to provide coverage for a specific period, or “term,” such as 10, 20, or 30 years. The policy pays a death benefit to your beneficiaries if you pass away during the term. Here’s how term life insurance expiration works:

• Set Term Period: The coverage is valid only for the specified term. Once this period ends, the policy expires, and the coverage stops.
• No Death Benefit After Expiration: If you outlive the term, the policy does not pay out a death benefit. You do not get a refund of the premiums unless you have a return of premium policy, which costs more.
• Renewal Options: Some term life insurance policies offer the option to renew the coverage at the end of the term, but the premiums will generally increase based on your age at the time of renewal.
• Conversion Options: Many term policies include a conversion option that allows you to convert the term policy into a permanent policy before the term expires, without a medical exam. This can be a valuable feature if you still need coverage and want to avoid higher premiums due to age or health issues.
  
  

Permanent Life Insurance: No, It Doesn’t Expire

Permanent life insurance includes whole life, universal life, and variable life insurance. These policies are designed to provide lifelong coverage, as long as the premiums are paid. Here’s how permanent life insurance works in terms of expiration:

• Lifelong Coverage: Permanent life insurance does not expire as long as you continue to pay the premiums. This means your beneficiaries will receive a death benefit regardless of when you pass away.
• Cash Value Component: Permanent policies accumulate cash value over time, which can be accessed or borrowed against during your lifetime. This cash value can also help keep the policy active if you cannot pay premiums at some point.
• Policy Lapse: Although permanent life insurance doesn’t have a set expiration date, it can lapse if you fail to pay the required premiums. If the policy lapses, the coverage ends, and the insurer will not pay a death benefit.
• Maturity Age: Some permanent policies have a “maturity age” (e.g., 100 or 121). If the policyholder reaches this age, the insurer typically pays out the cash value or the death benefit amount. However, most modern permanent policies are designed to last as long as you live.
  
  

What Happens When Term Life Insurance Expires?

If your term life insurance expires and you still need coverage, you have a few options:

1. Renew the Policy: If your policy offers a renewal option, you can extend the coverage. Keep in mind that the premiums will be higher since they are based on your current age.
2. Purchase a New Policy: You can apply for a new term or permanent life insurance policy. However, you will need to undergo a medical exam, and the premiums may be higher due to your age and any health changes.
3. Convert to Permanent Insurance: If your term policy includes a conversion option, you can convert it to a permanent life insurance policy without a medical exam. This can provide lifelong coverage and potentially build cash value.

Whether life insurance expires depends on the type of policy you have. Term life insurance provides coverage for a set period and expires if you outlive the term. Permanent life insurance, on the other hand, is designed to last your entire life, as long as you pay the premiums. When choosing between these options, consider your long-term financial goals, your family’s needs, and your budget.

At Toby Hansen Insurance Agency, we can help you find the right life insurance policy that fits your needs, whether you’re looking for temporary coverage or lifelong protection. Contact us today to explore your options and secure peace of mind for you and your loved ones.