What Happens When Term Insurance Expires?

by Gregory Hamel ; Updated July 27, 2017

Buying life insurance is a way for consumers to ensure that their families are taken care of in the event of death. Life insurance policies pay the beneficiaries of the policyholder a predetermined benefit if the policyholder dies. Term life insurance is a common type of life insurance that lasts for a preset period of time.

Coverage Ceases

The coverage provided by a term life insurance policy ceases when the policy reaches it’s expiration date. For instance, if you buy a 10-year term life insurance policy at age 50, your family will get no benefit from the policy if you die at age 61. The duration of term life insurance varies; you can buy plans that last as little as 5 years or as long as 30 years. If you expect to live a long time and want to maintain coverage, you should consider a longer term.

Payments

When term insurance expires, the premiums you pay to upkeep the plan also end. This can be advantageous to older workers and retirees that are on fixed incomes and no longer want to pay their insurance premiums. One of the primary reasons to purchase life insurance is to provide a benefit to family members to make up for years of lost wages. Older workers and retirees have fewer years of potential earnings to protect, which reduces the importance of life insurance.

Continuing Coverage

After a term life insurance policy expires, you can shop for another term life to extend your coverage into the future. The cost of term life insurance is based largely upon the age and health of the applicant. Any term policy you buy is likely to cost more than the original policy. If you have developed serious health conditions within the term of the original policy, it may be difficult to find a company that will sell you life insurance.

Considerations

Whole life insurance is an alternative to term life insurance that has no set expiration date. Whole life insurance lasts for as long as you continue making payments: if you make payments until you die, you will receive a benefit even if you live well past your life expectancy. Whole life insurance tends to cost substantially more than term life insurance.

About the Author

Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.