When you purchase a term life insurance policy, the premius are fixed for a set period of time. This is typically 10, 15, 20, 25 or 30 years. But what happens at the end of the term?
When you reach the end of the term, most people assume the policy will just expire. This is mostly true. However, you still have the option of continuing the policy at a significantly higher premium. Recently I had a client who had a $1mil 20 year term that reached the end of the benefit period. She was paying $350/year. At the end of the term, her premium jumped to $3500/year. She sensed something was wrong with her medically and she continued paying the premium. Shortly afterwards she was diagnosed with terminal cancer and was dead within 6 months. Her policy paid. Her widower called me in a panic and didn’t realize that she had continued paying the premiums and was very relieved.
If you are paying on a monthly bank draft, it is important to note that some companies will automatically draft the higher premium even without your permission. They will send something in the mail ahead of time but it is important to keep an eye on this. If you don’t wish to have them draft the new premium, I would recommend cancelling the policy prior to the expiration date.
When you approach the expiration on your term policy, it is important to reevaluate your insurance needs. If you still have dependents, debt or other financial obligations, you may still need some insurance. I would shop around and see what it costs for a new policy. This will require new medical questions and the rates will be based on your new age so they will be more expensive than your original policy. Please note that Set for Life has term insurance quoting tools.
For more information about term life insurance or to request a quote, contact Set for Life Insurance today!