What Happens When a Term Life Insurance Policy Expires?

What happens at the end of a policyholder’s term life insurance policy?

When your term life insurance plan expires, the policy’s coverage ends, and you stop paying premiums. Therefore, if you pass away after the policy ends, your beneficiaries will not be eligible to receive a death benefit.²

Some policyholders may only need term life insurance for a certain timeframe, such as to help protect a child until they reach adulthood and start their career. In this case, letting the policy expire without getting new coverage may be feasible. However, some may find that they’ll still need life insurance coverage, so they’ll have to get a new policy.

Can you get your money back after your term life policy expires?

Once your policy ends, you can’t get back the premiums you paid unless you have a return of premium rider.² This optional add-on lets you receive a refund of premiums if you outlive your policy term. However, a return of premium rider can increase your premiums, so you must budget accordingly when adding one.

What to do after your term life insurance policy expires

Here are some options you have to remain covered after your term life insurance policy ends:³

Convert your policy

Term life insurance often lets you convert your policy to a permanent life plan for higher premiums. This policy type lasts for your entire life if you remain current on your premiums. It also comes with a cash value growth component that can serve as a wealth-building vehicle.

Every time you pay premiums, the insurer puts part of your payment into the cash value. It then grows tax-deferred at a certain rate, depending on the policy type. For example, Aflac’s whole life insurance policies grow your cash value at a fixed, guaranteed rate.

As you accumulate cash value, you can borrow against it or withdraw from it. Plus, if you no longer need coverage and surrender your policy, your insurer pays you the cash value minus surrender charges. Keep in mind that using your cash value in these ways may incur tax consequences.

The lifelong coverage and cash value make permanent life insurance premiums more expensive than term life insurance.¹ However, these benefits can be worth the higher cost for those who want more peace of mind and wealth-building opportunities.

Extend your current policy

Many insurers attach renewal riders to term life insurance. This lets you extend your coverage without new underwriting or medical exams. Remember that premiums will be higher since you’ll be older when renewing your policy. Furthermore, you may have to stick with the same term length the original policy had.

Get a new term life policy

If your term life insurance expires and it’s too late to renew or extend coverage, such as if you didn’t need coverage for a few years, you can buy a new term life insurance policy. This may allow you more flexibility in choosing the policy term, but you’ll likely have to take a new medical exam to get coverage. Additionally, you’ll pay more in premiums since you’ll be older when applying, but your premiums may be less than if you renewed the policy.

Get permanent life insurance

If your term life insurance has already expired and it’s too late to convert it, such as if you didn’t need coverage for a few years, you can still purchase a permanent life insurance policy. However, traditional policies may require a medical exam. Fortunately, some policies are available with no medical exam, such as final expense insurance from Aflac.

Get a life insurance quote

If your term life insurance plan is expiring soon, evaluate your options so that you can continue coverage seamlessly. Whether you renew your coverage, convert to a permanent life insurance policy, or take out a new policy, understanding the pros and cons of your options is vital to making the best decision.

Aflac offers term and whole life insurance to replace your old coverage if you need a new policy. Start chatting with an agent for more information about your life insurance options.