Term Life Insurance Articles
Options When A Term Life Insurance Contract Runs Out
2010-11-06
Term life insurance is just one type of life insurance policy available to purchase. A term life contract is in effect for a set period of time, which could be 10, 20, 25 or 30 years. If the insured dies during the effective period of the policy, then a death benefit will be paid out to the named beneficiary. If the insured does not die during this time, once the policy expires, there are a few options from which the insured can choose.
Normally, term life insurance is bought to cover larger debts such as a mortgage, post-secondary education or loans. Without insurance, these expenses would fall on the shoulders of the surviving spouse. After the term life contract has reached its end, these debts should be mostly paid off. The mortgage is paid, and the children are grown and finished school. There is no longer a need for such a large policy amount.
If the insured is still in good health, then he or she may want to purchase another term life policy. Of course, there will be another medical exam to pass, and the premiums will be higher to reflect the risk of the insured's age. However, the face amount can be substantially reduced as the original debts covered will likely no longer exist. The insured can opt to purchase a new policy from the same insurance company or compare policies from several different companies.
If the health status of the insured has declined over the years, then he or she may want to convert the term policy to a permanent insurance product. No medical exam is required, but the premiums will be substantially higher than a term insurance policy. If the insured purchases a small insurance limit, then these premiums should not be astronomical. In order to exercise this option, the insured must convert the policy within a specified time period as outlined in the term insurance contract. If the insured fails to convert during this time, he or she can still do so, but the premiums will increase by a large percentage. The insurance company will adjust the rates to reflect the new risk that the insured poses.
The best course of action is to discuss conversion options even before purchasing a term insurance policy. An insurance agent can review all choices available, and once the opportunity arises, the insured will know what to do without uncertainty and confusion. All insured persons should also review their policy on a yearly basis in order to determine if their insurance needs have changed. Life is full of surprises, and with adequate insurance in place, some of these can be dealt with in advance.
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Term life insurance is just one type of life insurance policy available to purchase. A term life contract is in effect for a set period of time, which could be 10, 20, 25 or 30 years. If the insured dies during the effective period of the policy, then a death benefit will be paid out to the named beneficiary. If the insured does not die during this time, once the policy expires, there are a few options from which the insured can choose.
Normally, term life insurance is bought to cover larger debts such as a mortgage, post-secondary education or loans. Without insurance, these expenses would fall on the shoulders of the surviving spouse. After the term life contract has reached its end, these debts should be mostly paid off. The mortgage is paid, and the children are grown and finished school. There is no longer a need for such a large policy amount.
If the insured is still in good health, then he or she may want to purchase another term life policy. Of course, there will be another medical exam to pass, and the premiums will be higher to reflect the risk of the insured's age. However, the face amount can be substantially reduced as the original debts covered will likely no longer exist. The insured can opt to purchase a new policy from the same insurance company or compare policies from several different companies.
If the health status of the insured has declined over the years, then he or she may want to convert the term policy to a permanent insurance product. No medical exam is required, but the premiums will be substantially higher than a term insurance policy. If the insured purchases a small insurance limit, then these premiums should not be astronomical. In order to exercise this option, the insured must convert the policy within a specified time period as outlined in the term insurance contract. If the insured fails to convert during this time, he or she can still do so, but the premiums will increase by a large percentage. The insurance company will adjust the rates to reflect the new risk that the insured poses.
The best course of action is to discuss conversion options even before purchasing a term insurance policy. An insurance agent can review all choices available, and once the opportunity arises, the insured will know what to do without uncertainty and confusion. All insured persons should also review their policy on a yearly basis in order to determine if their insurance needs have changed. Life is full of surprises, and with adequate insurance in place, some of these can be dealt with in advance.
