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As the end of a term life insurance policy approaches, many policyholders may wonder if they still need coverage. Renewing the policy can result in significantly higher premiums, leading some to consider other options.
Permanent life insurance policies, while more expensive, offer benefits such as a cash-value component that can be borrowed against and options for investment growth, without the risk of lapsing. However, those with term policies may prefer simplicity and lower monthly premiums. Ultimately, it is important to reassess one’s insurance needs and weigh all the available options.
Term life insurance policies are popular among those who prefer simpler and more affordable products. For instance, a 30-year-old male in good health purchasing a 20-year, $500,000 policy, which is the most common coverage and term length, can expect to pay around $19-$28 each month according to the rates on our website: einsured.ca
When a term policy is expiring, there are a few options to consider.
Let it Expire
If you no longer need life insurance coverage, you may choose to let your policy lapse. The primary purpose of life insurance is to provide financial protection for your loved ones, particularly early in your career when you have limited assets. However, as your financial situation changes and you acquire sufficient assets, the need for life insurance may decrease. In such a case, buying additional coverage could be unnecessary and a waste of money.
Renew Your Current Policy
You have the option of extending your current policy, which is usually renewed annually and doesn’t require you to undergo additional health tests for approval. However, the downside of this is that your premiums will increase since your insurer is taking on more risk by extending your coverage without reassessing your health status. Extending your policy will likely result in a notably higher cost compared to purchasing a new policy, which involves going through the underwriting process.
Purchase A New Term Policy
When your term policy is about to expire, and you are still in good health, you can consider purchasing a new term policy. However, you should be prepared for another underwriting process and the possibility of higher premiums. For example, a 50-year-old male who is in good health and has purchased a 20-year, $500,000 policy can check the monthly premium rates on einsured.ca. If you face health issues, it may be challenging to obtain a new policy.
Convert into Permanent Insurance
Additionally, you may have the option to convert your term policy to permanent coverage, by paying a higher premium, subject to the terms and conditions of your current policy.
Bottom Line
If you are not sure whether to continue your term life policy or not, schedule a meeting with one of our insurance experts. We offer practical advice depending on the current situation and upcoming goals of your life.
