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What do I do if my term life insurance is coming to an end?

What do I do if my term life insurance is coming to an end?

Feb 11, 2023

If you took out life insurance a few years or decades ago, you may now be approaching the end of the term.

As the name suggests “term life insurance” remains in place for a fixed period of time, providing your beneficiaries with valuable financial support if you die within the term of the policy.

If the end date of your cover is approaching, then in many ways that is good news! Like many different types of insurance, the hope is that you never have to use term life insurance and that you’re still alive at the end of the term.

If your policy is approaching its end date, read on for some of the issues you’ll need to consider, and some options available to you.

3 quick things to remember when your term insurance ends

Before you read about some issues to consider, here are three quick things you should remember when your term life insurance ends.

1.Your cover ends

When you bought your term insurance, you will have chosen a term – perhaps 10, 20, or 25 years. When this term ends, so does you cover.

Think of it like car insurance. You normally take out your car insurance for a year and, if you don’t renew it, it simply stops.

2.Your cover will not automatically renew

However, unlike car insurance, your term life insurance will not automatically renew if you do nothing. It doesn’t just roll over like other types of insurance.

When your term ends, your cover stops altogether.

3.You normally don’t get anything back

Term insurance does not normally have any cash-in value. So, when it ends, you don’t receive a lump sum or any return on your premiums.

In this regard it is like a lot of other insurance products – if you don’t make a claim, you don’t get anything back. Remember, though, that the fact you haven’t made a claim means you’re still here!

Think about whether you still need life insurance

You will likely have taken your life insurance out for a specific reason. This might include:

  • You wanted your loved ones to be able to repay an outstanding mortgage balance if you died during the term
  • You wanted your children to receive financial support if you passed away before they reached adulthood, or the end of their further education
  • To provide your spouse or partner with a lump sum if you passed away, to replace lost income and to help them maintain their lifestyle and meet their monthly commitments.

So, if your term insurance is ending, you should first consider whether you still have a life insurance need.

If you have paid off your mortgage, you are now retired and drawing an income from your pensions or investments, or your children are grown and living independently, you might conclude that you don’t actually need any more life insurance.

You may also have accumulated assets over your lifetime – such as property, pensions, savings, and investments – which means you have the safety net of money your loved ones can use if the worst happened.

So, if you no longer have any debts to protect, or your loved ones may no longer need financial support if you were to pass away, you might see life insurance as a waste of money.

However, there could still be reasons that you need protection.

For example, if you have moved home and extended your mortgage term, you may still have an outstanding mortgage amount you’d like your family to be able to repay if you died.

Or, if your family circumstances have changed since you took out your initial cover – perhaps you have remarried and have younger children from a new relationship – you may still want the peace of mind that financial support will be available if you passed away.

If you’re not sure whether you still need protection, get in touch for a chat. Or, our handy life insurance calculator can help you to work out what level of cover (if any) would be appropriate for your current circumstances.

Taking out a new policy is likely to be more expensive

If you have decided that you still have a need for life insurance, it’s time to shop around for the most appropriate cover.

The cost of life insurance depends on factors such as the amount of cover you need, your age, the type of cover, and your health and lifestyle.

So, as you’re now older than you were when you took out your original cover, you need to bear in mind that the premiums for your new life insurance will be higher, and that you’ll pay more for your cover.

If you have developed any health conditions in the years since you took out your original life insurance, then that may also push up the cost of your protection.

The table below shows the monthly cost of £250,000 life insurance over a 25-year term for a non-smoker, based on the age at which the policy was taken out.

 

Age

Level term insurance

Decreasing term insurance

25

£6.63

£5.26

30

£8.94

£6.37

35

£12.31

£8.34

40

£18.02

£11.89

45

£27.97

£17.77

50

£45.20

£28.60

55

£76.64

£46.71

Source: Money to the Masses

As you can see, the cost of protection is significantly higher for someone in their 40s or 50s than a policy for an individual in their 20s.

So, you can expect to pay more for your cover. Use our online life insurance quote to compare prices from dozens of the UK’s leading insurers and find the best price for the cover you need.

If you’re taking out a new policy, you will have to complete a full application and disclose any medical conditions you have before an insurer can determine whether they can offer you cover. This may include a full medical and lifestyle assessment.

Your insurer might let you extend your cover

In certain circumstances, your insurer might let you apply to extend the length of your policy.

This could affect the premiums that you pay, and the insurer would have to assess any change request based on your circumstances at the time.

Speak to your current insurer to see if this an option they can consider.

Consider an “over-50” policy

If you have determined you still need some life insurance, but nowhere near the same amount, then an “over-50” policy could be a good choice for you.

If you have repaid your mortgage and no longer have anyone who depends on you financially, but you would like to leave a smaller amount behind – perhaps to pay for your funeral – then an over-50s life insurance policy may be more suitable.

Generally speaking, you won’t need to undergo a medical when you take out an over-50 life insurance policy, either – as you’re guaranteed to be accepted by many insurers.

We can help you take the right steps

If your term life insurance is coming to an end, there are several options available to you.

If you decide that you do still want the reassurance that you have some financial protection in place, we can help you to arrange the cover that’s appropriate to you.

We can help you to find the right cover and the most competitive price, meaning you won’t pay more than you need to for the cover you require.

Get a life insurance quote online now or contact us for assistance.

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