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Lock in new coverage before your term life policy expires, experts say

Lock in new coverage before your term life

Lock in new coverage before your term life policy expires, experts say. Credit: Getty Images/iStockphoto/courtneyk

Twenty or 30 years may seem like an eon, until you look up and your term life insurance policy is about to expire and you still need coverage.

What comes next? Much depends on your age, health and finances. You have options.

Review your policy. Many times, a 20-year life insurance policy may look like it expires after the 20th policy year, but look at your original contract.

“Some term policies have a guaranteed renewable feature, which means they can't cancel your life insurance after the initial contract period as long as you choose to pay the renewal rate. This rate is based upon your current age and will continue to increase each year based upon your new age,” says Matthew Barr, a life insurance agent in Erie, Pennsylvania.

Explore permanent insurance. Your contract could have a “conversion privilege,” which lets you convert your term plan to a permanent cash-value life insurance plan without having to go through medical underwriting. “This is huge, especially if you’ve been diagnosed with a serious disease or illness. You will not be declined life insurance coverage,” says Barr.

“If the objective is long-term growth, wealth, liquidity and flexibility, permanent coverage has the lowest long-term cost for the highest value over the long run,” says Michele Lee Fine, president of Cornerstone Wealth Advisory in Jericho.

Don’t delay. Make sure you have options. Don’t wait until the end of the 20-year period if you think you still want to maintain coverage. Says Mike Raines, an independent insurance agency owner in Cummings, Georgia, “It is best to lock in new guaranteed level rates before your 20-year term expires.”

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