Term Life Insurance Articles
What To Know When A Term Life Contract Ends
2010-06-06
A term life contract can range from a simple one-year period up to 30 or even 40 years in length. In addition, it can come with variable or fixed-rate premium options, and may also come with the added benefits of guaranteed insurability and automatic annual renewal. No matter what the options selected or term life insurance quote offered, all contracts must eventually come to an end, and ideally, without the death of the policyholder. Once a contract has expired, it is worthwhile to know what the potential next steps may be for a client with regards to a term life insurance quote.
First, it is important to understand that no money will be paid out or recovered. Unless the insured party dies during the term of the contract, the insurance agency will not pay any of the value of the policy. These types of life insurance contracts, unlike whole life insurance policies, have no cash value until the check is in the mail. If a 30 year term ends and the policyholder is alive, no premiums will be returned and no payout will be issued. In effect, the insurance company will have been paid for a period of 30 years, but will not have paid out on behalf of the customer. This can leave many clients feeling cheated, but it must be understood that this is the nature of the industry. Insurance is meant to protect against potential risk. If a term life contract was entered into at an early age, especially on a fixed payment rate, it can often be minimal in cost when balanced out against the potential savings it would offer if something were to happen to the insured.
Next, it is crucial to understand that any arrangements which had been made with the insurance company will now be null and void. The reasonable rate which was offered many years ago will no longer be in force, and the amount of coverage offered, as well as the price it is offered at, can be substantially different. The company is not obligated to re-insure a 30 year customer, nor are they required to offer any sort of discount. Having added 30 years to their age, the client represents a far more substantial risk than when they were first insured, meaning that any premium will be based on that new risk assessment.
Many individuals plan to have their term life insurance expire near the time their retirement begins, in the hope that they will have enough savings to cover the costs ordinarily paid by term life insurance. This hope does not always bear fruit, however, and it is important to understand how an insurance company will view a client after the term of their contract has expired.
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A term life contract can range from a simple one-year period up to 30 or even 40 years in length. In addition, it can come with variable or fixed-rate premium options, and may also come with the added benefits of guaranteed insurability and automatic annual renewal. No matter what the options selected or term life insurance quote offered, all contracts must eventually come to an end, and ideally, without the death of the policyholder. Once a contract has expired, it is worthwhile to know what the potential next steps may be for a client with regards to a term life insurance quote.
First, it is important to understand that no money will be paid out or recovered. Unless the insured party dies during the term of the contract, the insurance agency will not pay any of the value of the policy. These types of life insurance contracts, unlike whole life insurance policies, have no cash value until the check is in the mail. If a 30 year term ends and the policyholder is alive, no premiums will be returned and no payout will be issued. In effect, the insurance company will have been paid for a period of 30 years, but will not have paid out on behalf of the customer. This can leave many clients feeling cheated, but it must be understood that this is the nature of the industry. Insurance is meant to protect against potential risk. If a term life contract was entered into at an early age, especially on a fixed payment rate, it can often be minimal in cost when balanced out against the potential savings it would offer if something were to happen to the insured.
Next, it is crucial to understand that any arrangements which had been made with the insurance company will now be null and void. The reasonable rate which was offered many years ago will no longer be in force, and the amount of coverage offered, as well as the price it is offered at, can be substantially different. The company is not obligated to re-insure a 30 year customer, nor are they required to offer any sort of discount. Having added 30 years to their age, the client represents a far more substantial risk than when they were first insured, meaning that any premium will be based on that new risk assessment.
Many individuals plan to have their term life insurance expire near the time their retirement begins, in the hope that they will have enough savings to cover the costs ordinarily paid by term life insurance. This hope does not always bear fruit, however, and it is important to understand how an insurance company will view a client after the term of their contract has expired.
