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What happens if you outlive your life insurance?

Jun 11, 2020 4 Minute Read

Life insurance is designed to protect you when it counts. But depending on the type of policy you buy, your coverage may not last forever. Here’s what to expect for each policy type – and what to do if you outlive it.

Table of contents

Will my life insurance expire?

Your policy’s expiration date depends on what kind of life insurance you buy.

Term life

Term life insurance offers coverage for a specific period of time, usually ranging from 10 to 30 years. It’s designed to protect you during the times when you need insurance the most, like raising a family or paying off the mortgage on your home.

If you die during the life of your term life insurance policy, your family receives a lump sum to use for expenses, bills, debt, or whatever else they wish. But if you’re still alive when your policy term ends and it expires, you have a few choices:

  • End your coverage. By the time your policy ends, you may no longer need the same amount of protection, especially if you end up outliving your term. It’s a good idea to reassess your current and future expenses and why you bought your policy in the first place to ensure you’re making the right choice.
  • Renew your policy. In some cases, you can renew your current plan for short periods without needing to requalify, at a slightly higher rate each time. This can be useful if you don’t know how long you’ll need coverage, or if you’ve developed health issues that might make it difficult to qualify for a new policy.
  • Buy another policy. Once your policy term is up, you may be able to purchase another term life policy if you end up outliving your term. Keep in mind that your new coverage will cost more based on your current age. You can also look at other alternatives, such as a final expense plan or converting to permanent insurance.

Permanent life insurance

With permanent life insurance, you get lifelong financial protection with no need to choose a coverage length or worry about renewal. After you die, your family receives the death benefit as long as your premiums are paid. Permanent policies also come with an extra tax-deferred cash value option, making it more expensive than term life.

Permanent life insurance doesn’t expire the same way a term policy does, but it does eventually “mature” if you live long enough. At that point, the full cash value of your policy would pay out, ending your coverage. Most policies are set to do this when you turn 121 to allow for longer life expectancies these days, but some older policies mature at 100.

It’s important to note that if you do live long enough to see your policy mature, your death benefit could become taxable income. Be sure to ask your life insurance agent about policy maturity when you shop for a plan and consult your tax advisor.

Final expense

Designed to cover end-of-life costs like your funeral, medical bills, and even leftover debt, final expense helps minimize late-life financial stress. This policy generally has an easy approval process, with no medical exam required.

Final expense insurance, built for people between the ages of 50 and 85, is another type of permanent insurance. This means your policy will eventually mature as well after a certain period, so don’t forget to check your options.

Still have questions?

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At eFinancial, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed and updated regularly to ensure the information is as relevant as possible.