Term life insurance provides coverage for a certain time period. It’s often called “pure life insurance” because it’s designed only to protect your dependents in case you die prematurely. If you have a term policy and die within the term, your beneficiaries receive the payout. The policy has no other value.
You choose the term when you buy the policy. Common terms are 10, 20 or 30 years. With most policies, the payout, called the death benefit, and the cost, or premium, stay the same throughout the term.
When you shop for term life:
Ideally, your family’s need for life insurance will end around the time the term expires: Your kids will be on their own, you’ll have paid off your house, and you’ll have plenty of money in savings to serve as a financial safety net.
Term life insurance is attractive for young couples with children. Parents may obtain large amounts of coverage for reasonably low costs. Upon the death of a parent, the significant benefit can replace lost income. They are also well-suited for people who temporarily need specific amounts of life insurance. In these cases, the policyholder believes their survivors will no longer need extra financial protection, or they will have accumulated enough liquid assets to self-insure.
Term life insurance doesn't always "expire" at the end of the term period. What does expire, however, is the low rate you've been paying. The term period is set when you purchase the policy and typically lasts for 10, 15, 20, 25 or 30 years. After that, you can usually continue the policy on a year-to-year basis to age 95, but at a much higher cost.
Well, that depends on your life insurance needs. Even though your term period has expired, your policy may still have value to you. If you find that you still need life insurance protection at this point, you do have options for extending, converting or renewing the coverage.
Depending on your situation your needs for a term life insurance policy may have changed. If you are fifty years or older you may consider converting your term life insurance policy to a whole life/final expense policy.
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