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February 15, 2021

Can Life Insurance Policies Expire?

life insurance expiration

Life insurance can be a great gift to your loved ones. After all, you don’t buy a life insurance policy for yourself – you buy it for them, so the ones you leave behind can have a cash benefit in the event of your passing.

If you’re considering purchasing a life insurance policy, you may have some questions about how they work, like can life insurance policies expire? The answer to that depends on the policy.

Policy expiration

The expiration of a life insurance policy is the policy’s coverage ends. This is also referred to as a policy cancellation or termination.

Types of life insurance policies

Generally, life insurance policies are available in two types: permanent life insurance and term life insurance. Like their names imply, permanent life insurance policies are meant to provide coverage for your whole life; term life insurance policies are meant to provide coverage for a specified amount of time.

As long as premiums are paid on time, permanent life insurance policies do not expire. Their coverage lasts for the insured’s entire life. Some permanent life insurance policies can end between ages 100 to 121. This will depend on the policy or company. If the policy ends at the age, you will still get the death benefit.

Term life insurance policies have specified terms that vary by policy. Many different lengths of terms are available, and according to the Insurance Information Institute, common term lengths are yearly/renewable, 5-year renewable, 10-year, 15-year, 20-year, 25-year, 30-year, and Term to a specified age (usually 65).1

At the end of the specified term of the policy, life insurance coverage ends. At this time, the insured often has the option to convert the policy to a permanent policy or to renew the term. Check the conditions of the policy to see if it has these options.

Nonpayment

Coverage ends when a life insurance policy lapses. Any life insurance policy can lapse due to nonpayment, whether the policy is permanent or term. Life insurance policies often have a grace period to pay the premium. Always check the terms of a life insurance policy to see if it has a grace period (which begins with the premium due date). Ensure you fully understand all the policy’s terms and conditions.

If the policy has a cash value, you may have reduced paid-up or non-forfeiture options. In general, to be “paid up” means you have paid for the policy in full with the premiums you have already paid and the policy is still in-force. In the case where your policy isn’t paid up in the traditional sense, you might be able to stop paying your premiums completely and in turn receive a reduced death benefit (and in many cases you will lose any cash value accrued to date as well).2 This is referred to as a “reduced paid-up” option. Another option similar to this is converting your whole life policy into an extended term life policy, but this varies on what options are presented by your insurer.2

If you are interested in purchasing a life insurance policy, or if you have any questions about permanent or term life insurance policies, contact a licensed insurance agent.

  1. Insurance Information Institute, What are the Different Types of Term Life Insurance Policies?, 2021
  2. Insurance Information Institute, If I Can’t Pay My Premium, What Should I Do?, 2020

Categories: Life Insurance, Term Life Insurance, Whole Life Insurance

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