Does Term Life Insurance Expire?

by Vicki A. Benge, Demand Media
    Term life insurance provides coverage for a certain period of time..

    Term life insurance provides coverage for a certain period of time..

    If you have wondered if term life insurance expires, the short answer is "yes." Term life insurance does indeed expire or come to an end. That is why it is called "term," because it lasts for a limited time with a fixed end. Some term life insurance contracts will only protect you to a certain age and still others for a limited number of years, possibly only one year. However, some term policies give you the option of renewing when the term is up. Others are convertible to a permanent life policy, also called whole life or a cash value policy.

    Gap Coverage

    Term life insurance is one of the cheaper life insurance options available and can provide you with insurance during times when you have no other coverage. For example, some of us are offered life insurance through our employers. If we change jobs for any number of reasons, our life insurance coverage does not normally go with us. You will want to plan ahead and contract temporary coverage unless going immediately from one job to another with no wait on insurance.

    Renewable Contracts

    Young couples often buy term life insurance simply because the premiums fit better in the household budget. If you foresee a certain period when life insurance is needed, for example, until the mortgage is paid or until the children complete college, consider that your financial circumstances may change before that time and look for a renewable policy -- that is, one that will not expire until say, age 80. With this provision as part of the policy, you will have the option of maintaining the term life insurance well beyond the time you originally planned. The life insurance industry is competitive enough that some term life insurance contracts allow the policyholder to renew without a medical exam and without increasing premiums. In fact, some term life insurance policies offer you the option of renewal to age 80 with a promise not to raise premiums throughout the years.

    Benefits

    Couples should have their own individual policies to replace income. Although a family term life insurance policy may be available, it may pay only one death benefit. If you're recently married and starting a new family, term life insurance may be an affordable means of protecting your assets and your young family. Once you have established financial independence or have enough savings and investments to support your family should something unforeseen happen to you, the term policy may no longer be needed. It all depends on your personal situation.

    Convertible Policies

    Some insurance policies are sold as term and can later be converted to a life insurance policy that builds cash value. These convertible term insurance policies are often more affordable for young families than directly purchasing a cash value policy. If you do choose to convert the policy from term to cash value, be aware that premiums will likely increase at conversion. In addition, be sure you know upfront if there is a limited window of time when the policy has a convertibility provision.

    About the Author

    Vicki A Benge began writing professionally in 1984 as a newspaper reporter. A small-business owner since 1999, Benge has worked as a licensed insurance agent and has more than 20 years experience in income tax preparation for businesses and individuals. Her business and finance articles can be found on the websites of "The Arizona Republic," "Houston Chronicle," The Motley Fool, "San Francisco Chronicle," and Zacks, among others.

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