How Term Life Insurance Works
Term life insurance is one type of life insurance product you can buy for protection. It is often the most affordable option. You’ll be covered with term life insurance for a specified amount of time. For example, you can buy term life insurance for 10 or 20 years. It’s a popular life insurance choice among younger customers who are in good health.
As the insured person, if you die before the life insurance term is reached, your beneficiaries will receive a financial benefit payment.
Benefits of Term Life Insurance Policy
Term life insurance offers you and your family peace of mind that they will still be taken care of if anything should happen to you. This is because life insurance companies will pay a specified amount of money to beneficiaries.
This is called the death benefit where you’ll be able to name beneficiaries of your policy. This money can help your loved ones cover the costs of your funeral, the mortgage, outstanding credit card debt, etc. Life insurance is an investment into the security and well-being of your loved ones should you pass away.
How Permanent Life Insurance Works
Cash Value Accumulation In Whole Life Insurance
Whole life insurance is a form of permanent life insurance. The policy provides coverage for the duration of your life. It also offers a guaranteed death benefit for your beneficiaries that won’t change.
One of the attractions to whole life insurance is that part of the premiums you pay go into a cash-value account. This cash value accumulation is like a savings plan that you or your beneficiaries can access at a later date.
What Happens To A Life Insurance Policy When It Expires?
Should your term life insurance policy expire, it’s the end of your agreement with the insurance company. You’ll stop paying premiums and the company will no longer offer your beneficiaries any death benefit should you pass away.
All of the money you’ve paid into your insurance will stay with the company. Unless you have a whole life insurance policy, you won’t get any money back from the insurance company.
What To Do When Term Life Insurance Policies Expire?
If your term life insurance policy expires before you need it, that’s good news. Term life insurance offers a sense of security for you and your loved ones, but if you never use it, you’ll have questions about what to do when your life insurance expires.
It’s possible to renew your life insurance after it expires, but the premiums will increase. This is because as you age, the risk of you needing to cash in on the policy also increases. For this reason, we recommend you consider switching insurance at an earlier date. In other words, don’t wait until your term life insurance policy expires before you buy longer-term insurance.
Here are some options you can consider when your term life insurance policy is about to expire:
1. Extend Your Current Policy
2. Convert Term Life Insurance To Permanent Insurance
3. Buy A New Life Insurance Policy
Depending on what stage of life you are in, you may want to change your life insurance policy. You might have a bigger family now compared to when you first bought insurance, or you have more savings.
Change happens and if your life insurance policy doesn’t meet your needs anymore, it’s best to discuss your needs with your life insurance agent. They can help you find coverage that fits your current situation.
Can I Convert My Term Life Insurance Policy To Universal Life Insurance?
Why Shelter Bay Should Be Your Life Insurance Broker
Whether you’re buying life insurance for the first time or you want to review your options, Shelter Bay Financial should be your first call. Our brokers have extensive experience in the Canadian life insurance industry. We seek to understand your needs and situation and find the best insurance product for your peace of mind.
When you’re looking for answers about how to handle the expiration of your term life insurance, contact Shelter Bay.