Unlike permanent life insurance, term life insurance stays in effect for only a certain period of time—such as 10, 20, or 30 years. If you die during that period, your beneficiary will receive a payout; if you die after the policy has expired, they will receive nothing. So what should you do if your term expires and you still need life insurance?

Key Takeaways

  • If your term insurance policy is expiring and you still have dependents relying on your income, you may need new insurance.
  • You might have the option to continue your current policy on an annual basis, but that could be expensive.
  • If you’re in reasonably good health, you may be able to find a new and affordable term policy. Some insurance companies write policies for applicants up to age 80.

Understanding Term Life Insurance

The principal purpose of life insurance is to provide financial support for your dependents should you die prematurely. For example, someone might buy a 30-year term policy at age 40, figuring that by the time they reach 70, their kids will be grown up, out of the house, and self-supporting.

The advantage of term insurance over whole life and other forms of permanent insurance is that it’s a lot cheaper, so the same amount of money can get the policyholder a larger death benefit. The disadvantage is that it eventually comes to an end, at which point the policyholder, now older, may find it difficult to buy another policy.

For many, probably most, policyholders this is not a problem. However, suppose that our hypothetical 40-year-old with a 30-year term policy is approaching age 70 and still has dependents. Perhaps one of their children has had unforeseen physical or psychological problems and can’t be self-supporting. Or perhaps the policyholder is now responsible for the support of a grandchild or two.

In such cases the policyholder might want to try to keep some life insurance. So what exactly are the options?

The COVID-19 pandemic has reportedly caused many insurers to reevaluate their life insurance products for older people, who are more vulnerable to dying from the disease. So until the pandemic ends, you may have fewer options or encounter higher prices than you would otherwise.

What to Do if Your Policy Is Expiring

You will have the most options if your policy is still in force and hasn’t reached the end of its term. Ideally, it’s best to make plans at least a year before that point. Here are some steps to consider.

Extend your coverage

Many term policies have a guaranteed renewability provision that allows you to keep your insurance in effect after the end of the original term, as long as you continue to pay the premiums. While your premiums are likely to rise each year—perhaps considerably— based on your current age, you typically won’t have to submit to a new physical exam. Some policies allow you to renew on this basis up to age 95, assuming you can afford to.

Convert to a permanent policy

Your term policy may also include a provision for converting to a whole life or universal life policy, again without a physical exam. The new insurance policy could continue for the rest of your life or for as long as you need it. The premium on your new policy will be higher than you have been paying for term insurance, but you may have the option of converting to a policy with a smaller death benefit in return for a lower premium if that works best for you. Policies differ in terms of when you can make this switch (there may be age limits), so you’ll need to check your policy or get in touch with your insurance company or agent to find out.

Shop around for a new policy

If you’re reaching the end of your current term policy, don’t automatically assume that you can’t get a new one just because of your age. Some insurers write policies for people up to the age of 80. You will typically need to have a medical exam, especially if the policy is for over a certain amount, such as $50,000, but some lower-value policies don’t require one. Research the available policies to find the best term life policy for you.

Combine several smaller policies

If you have health issues that make it difficult for you to buy a sufficiently large term insurance policy, you may still be able to cobble together a portfolio of smaller policies that will add up to what you need. These policies may not require a physical exam, but they may ask for some health information. In addition to buying one or more small policies through an insurance agent or directly from insurance companies, you could be eligible for group life insurance through your employer, if you’re still working, or through a trade association, college alumni club, or other organization to which you belong.

Some insurance companies submit your name to a company called MIB Group, which reports back the number and coverage amount for other policies you have. If the insurer believes you are applying for more insurance than you would reasonably need, it may deny coverage.

Buy a burial policy

Still another option is final expense or burial insurance. These are typically whole life policies with relatively small payouts, such as $20,000 or $25,000. They may require no medical exam and—despite their grim name—will provide money that your beneficiaries can use for any purpose they wish.

The Bottom Line

If you have a term life insurance policy that is due to expire in the near future, the first question to ask yourself is whether you still need insurance. If your former dependents no longer rely on your income, you may not. However, if you find that you do need insurance, there are several ways to obtain it. If your health is iffy, your best bet may be to try to extend your current term life policy or convert to a permanent policy with that insurer. If you’re in good health, it may pay to shop around for a new term life policy, which could prove more affordable.