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Q: What Happens When My Term Life Insurance Expires?

2011 June 13

Most term life plans are guaranteed renewable to Age 90 or older so they don’t really expire.  However, once the level premium period expires the cost of the policy increases substantially.  The reasoning to still consider term life insurance is based on the affordability and flexibility provided by during the time period selected and the other financial accomplishments that can be achieved during this time period.  The basic premise for cash value plans (Whole Life, Universal and Variable Life and Return of Premium Plans) is that you will need life insurance your whole life so the plans overcharge you in the early years to pay the higher costs in the later years.  Dave’s opinion is that if you buy term life insurance then you avoid this overpayment period and use the savings to attack debt and to build savings.  Over 15,20 or even 30 years with your debt eliminated and your savings grown you no longer need life insurance.  The insurance industry for years has convinced the public that you have to have life insurance for your whole life.  You only need life insurance for a period where your premature death would cause your family financial hardship.  Click on Term vs. Cash Value to learn more about the benefits of Term Life Insurance.

Once you are out of debt and built wealth the need for life insurance is eliminated and there are so many smarter things to do with your money.  If in the unlikely event that you still need life insurance after 20 or 30 years then coverage is still available and still less expensive than a cash value type plan. You would be subject to re-qualifying based on your health but that risk would be worth taking instead of purchasing a poorly designed cash value policy today and suffering from its affect on your other financial strategies throughout the same time period.

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