What Happens if You Outlive Your Term Life Insurance?

Term life insurance is popular for a reason — it’s usually straightforward, budget-friendly and designed to cover you during the years when financial protection matters most. But what happens if that coverage runs out and you still need insurance? Whether you’re nearing the end of your policy or simply planning ahead, there are several ways to keep some form of protection in place. Understanding your options now can help you avoid gaps later — and make confident decisions about what’s next for you and your loved ones.

What happens when term life insurance expires?

When your term life insurance policy expires, coverage simply stops — no more premiums, and no death benefit payout. Unless your policy includes a return of premium rider (which refunds what you’ve paid in), there’s usually nothing returned when the term ends.

Ideally, you purchase a term policy that ends when your financial obligations — like raising kids or paying off a mortgage — are behind you. But life doesn’t always follow a perfect timeline. You might still need coverage because of lingering debts, dependents who still rely on your income or new responsibilities that have come up.

In those cases, you’ve got options. Some policies let you renew coverage annually after the term ends, though rates go up each year as you age. It’s a good fallback if your health has changed and getting new coverage would be tough.

Another option is converting your term policy to permanent life insurance, assuming your policy includes a conversion rider. This lets you extend your coverage for life without needing to prove you’re still insurable — but you’ll need to act before the conversion window closes, which may happen before the term officially ends.

Purchasing coverage after you outlive your term life insurance

Those who will need further coverage after the term policy expires may want to start evaluating other options far in advance of the term’s termination date. That way, you’ll have time to take advantage of your policy’s conversion rider if it’s offered and makes sense for your circumstances. It is important to note here that you typically cannot add a conversion rider once the policy is in force. It’s either included from the start or not, depending on the insurer.

Term conversion

If your term life policy includes a conversion rider, you may be able to switch it over to a permanent life insurance policy — no medical exam or questions required. This can be especially helpful if your health has changed and getting new coverage would be difficult or costly.

Conversion windows vary. Some policies only allow you to convert within a specified time period (e.g., the first 10 years of policy activation), while others give you until the end of the term. It’s important to know your policy’s timeline so you don’t miss the opportunity.

If you think you might need coverage long-term, understanding your conversion options upfront can give you flexibility down the road.

Renew your term coverage

Most term life insurance policies offer the option to renew for a limited number of years without requiring evidence of insurability. This means you can extend your coverage even if your health has changed. For instance, a 10-year term policy may be renewable each year for up to 10 additional years. During each renewal, your premium will increase based on your current age.

Although premiums for renewed policies typically significantly increase each year, this renewability option is especially beneficial if you develop serious health issues, as it ensures continued financial protection for your family without needing a new medical exam. The increase in premiums due to age at renewal is usually less significant than the potential increase or inability to secure a new policy if you were to reapply after being diagnosed with a serious health condition. This makes the renewability feature a valuable safeguard against the uncertainties of future health issues.

Purchase a new term policy

For the relatively young who are in good health, the most inexpensive life insurance option might be to purchase a new term policy. Premium costs may also go down if a much lower death benefit and a shorter term are purchased, which may be a good option for people who need less coverage than when they purchased their initial term policy.

For example, for someone whose youngest child is still in high school when their 20-year term policy expires, an additional 10-year policy may be sufficient to ensure that their dependent has completed college and no longer needs financial support from their parents’ income.

Keep in mind that a medical exam will likely be part of the underwriting process for any new term policy, and if there are new health issues since the first policy, the rate will likely increase. Age is also a factor — older people pay more for their term life insurance policies.

Purchase a permanent policy

Another option for those without a term conversion rider is to purchase a permanent life insurance policy after the term policy expires. Permanent life insurance policies, such as whole life insurance, are more expensive than term life insurance — sometimes up to ten times more costly. However, the cost can vary based on personal factors and policy choices. Overlooking cost for a second, here are some benefits of permanent life insurance:

• Lifetime coverage: Permanent policies provide coverage for the policyholder’s entire life, as long as premiums are paid. However, lifetime in this context typically falls between the ages of 95 and 121, the maximum coverage age range insurers typically set.
• Cash value component: These policies include a tax-deferred cash value component, which grows over time. The cash value can be used as collateral for a loan or withdrawn.
• Safe investment: While the cash value component may not earn as much interest as some other investments like the stock market, it is generally considered safe and can be an important part of financial planning — but typically should not be your primary means of saving for retirement. Life insurance is insurance, not an investment product.

There are also several different types of permanent life insurance, each with unique features. Here are the common products you will come across:

• Whole life insurance: Offers fixed premiums, a guaranteed death benefit and a cash value component that grows at a guaranteed rate.
• Universal life insurance: Provides flexible premiums and death benefits, with a cash value component that earns interest based on current market rates or a fixed rate.
• Indexed universal life insurance: Similar to universal life but with a cash value component tied to a stock market index, providing potential for higher returns.
• Variable universal life insurance: Combines the flexible features of universal life insurance with investment options for the cash value component, allowing policyholders to invest in various sub-accounts.

Although permanent policies are not recommended for everyone due to their higher cost, they can be beneficial in certain situations. For example, they may be ideal for individuals with a child with a disability who will never be financially independent or a non-working partner who would need financial support if the primary earner dies.

Final expense insurance

The median cost of a funeral in the United States is $8,300. For those who don’t want to burden their heirs with end-of-life expenses and don’t need a significant payout, one type of permanent insurance to consider is final expenses or burial insurance. Final expense life insurance often has low coverage limits capped at $10,000 or $25,000, so it’s not the best option for income replacement. Additionally, the premiums tend to be comparatively expensive because a medical exam is not required and the insurance company assumes more risk. As with similar forms of insurance, cost will go up for more coverage and will also rise with the policyholder’s age.

Final expense insurance can be a good choice for older adults whose primary goal is to prevent their beneficiaries from facing financial challenges associated with their death. It may also be suitable for people with pre-existing health conditions, or those who have been denied standard life insurance in the past.

Do I still need life insurance?

As your term life insurance policy nears its expiration, it can be helpful to evaluate whether you still need life insurance coverage. Your need for continued coverage will depend on various personal and financial factors.

If your term coverage is ending, you may still need life insurance if you have:

• Dependents still relying on your income: If you still have dependents who rely on your income for their living expenses, education or other needs, maintaining life insurance coverage can help provide financial security for them.
• Outstanding debts: If you have significant debts, such as a mortgage, car loans or other financial obligations, life insurance can help make sure these debts are paid off without burdening your loved ones.
• Business obligations: If you own a business, life insurance can help with business succession planning, covering key persons or repaying business loans in the event of your death.
• Significant wealth: Life insurance can be a tool for estate planning, providing liquidity to pay estate taxes or leave a financial legacy for heirs.
• Special needs dependents: If you have a dependent with special needs who will require lifelong financial support, life insurance can ensure their needs are met even after you are gone.

On the other hand, you might not need life insurance in these scenarios:

• Financial independence of dependents: If your children or other dependents are financially independent, you may no longer have a need for life insurance coverage.
• Paid-off debts: If you have paid off your major debts and have sufficient savings or other assets to cover any remaining obligations, continuing life insurance might be unnecessary.
• Retirement savings: If you have adequate retirement savings and other investments to cover your and your spouse’s living expenses, you may not need additional life insurance coverage.
• Spouse’s financial stability: If your spouse or partner is financially secure and capable of maintaining their lifestyle without your income, the need for life insurance may be reduced.

Assessing your current financial situation and future needs is critical in determining whether to maintain or purchase new life insurance coverage. Consider consulting with a financial advisor or licensed insurance professional to help you make an informed decision based on your specific circumstances and financial goals.

Frequently asked questions

• What is the best life insurance company?
  

  The best life insurance company for you will be a personal decision, based on your unique characteristics and coverage needs. Speaking with an independent insurance agent can be a good first step toward identifying the best life insurance companies to fit your budget, health and overall situation.

• Which type of policy is better: term or permanent?
  

  Which type of policy will be better for you depends on your situation and other variables. One of the primary trade-offs between these two types is that one tends to be more affordable but not lifelong, while the other tends to be more expensive but provides long-term coverage. Furthermore, permanent policies are very complex and offer different types, such as whole life and universal life, each offering further options for specialization.

• Do I need life insurance if I have no dependents?
  

  Even if you do not have dependents, you still may want to consider a life insurance policy. Many people choose to purchase a policy with their spouse as the beneficiary to assist that person with the burden of end-of-life costs. You may also choose to leave your policy’s death benefit to a nonprofit organization, educational institution or business you care about.

• Can you cancel a life insurance policy?
  

  Yes, you can cancel a life insurance policy at any time. If you have a term policy, you can either formally cancel with your insurance company, or you can simply stop paying the premiums. With permanent life insurance, however, the cancellation process can be more complicated. You typically have to start the cancellation process by notifying your insurance company. Depending on how long the policy has been in force, you might be required to pay a surrender fee. In most cases, you are allowed to keep the cash value when you cancel a permanent life insurance policy, but the cancellation fees will be subtracted from your final payout. Check your specific policy or speak with your insurance agent to learn more about the process and any potential penalties for canceling.

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

  Usually, no. With most term life insurance policies, the monthly or annual premiums you’ve paid over the years aren’t refunded once the term ends. Similar to how health, home and auto insurance policies don’t provide refunds if you never make a claim. However, some insurers offer a return of premium (ROP) option that does refund your premiums if you outlive the term. Just be aware that these policies often cost significantly more than traditional term life policies.