When your term life insurance policy is coming close to its expiration date, there are typically up to four ways you can deal with such a scenario.
First, if the life insurance coverage is no longer needed just let it expire. You can either choose to cancel the policy via some simple paperwork, or simply stop paying the premium and the policy will expire all by itself, typically 30 days after the payment due date. Remember, there are no surrender charges or fees for cancelling a term life insurance policy at any time.
Second, if you still need coverage for another set period of time, and you remain in relatively good health, you can shop around for a new term life insurance policy. Generally-speaking, you will get the best offer by comparing price quotes from multiple companies; an easy way to do this is by working with an independent life insurance agent who represents many companies or by checking price quotes online through a reputable website.
Third, if you think you only need coverage for another year or two, term life insurance policies generally allow you to keep the policy in place as a guaranteed annual renewable policy, meaning that you do not need to re-qualify to continue coverage, and the policy will lock-in a new premium amount based on your age and current corresponding rates on a yearly basis.
Fourth, and finally, if you are no longer in good health, but need to continue your coverage for an extended period of time, many term life insurance policies will allow you to convert (or change) your term life insurance policy to a permanent life insurance policy—one that will last as long as you need it to—for a new locked-in premium. This can guarantee coverage for as long as you live and does not require you to re-qualify based on your current health.
In summary, the best way to deal with a term life insurance policy that is getting ready to expire is to know all of the available options, know your life insurance needs and financial plan, and then choose the option that best matches your current life insurance needs—and your budget—when your term life insurance policy does expire. As the saying goes, “knowledge is power” and you want to make sure you have the power to make the best decision for the financial security of your loved ones.