The financial security that term life insurance can give you and your family is enormous, but what happens to it when the term of the policy expires, and you are still alive? Is your money returned? Making an informed choice requires knowing what happens to your coverage if you outlast the policy’s term.
What is Term Life Insurance?
One of the most fundamental and uncomplicated types of life insurance is term life insurance. As its name implies, term life insurance covers a specific period.
Your heirs will hold the money advantage during that time. The policy expires, and you (or your heirs) receive nothing if you do not pass away during the period.
How Much Does Life Isurance Cost?
Because term life insurance is the least expensive, it is a wise alternative for people who want protection but have a limited budget. It’s also wise for those who only require insurance for a short time, such as the years until their kids move out or until retirement.
One of its key drawbacks is that term life insurance does not accrue cash value like whole life insurance. This implies that you won’t receive anything from the policy if you don’t pass away throughout the period.
The fact that term life insurance prices are not secured is another drawback. They can—and frequently do—increase with age. This implies that you might eventually cancel the coverage if it becomes unaffordable.
In general, term life insurance is wise for those who require protection but are on a tight budget. It’s also a wise decision for those who simply need coverage for a short time.
What Happens if the Policyholder Does Not Die During the Term of the Policy?
It is the most popular option because term life insurance is affordable and offers protection when a person is most likely to pass away.
But you cannot predict what will occur to the policy’s expiration date. In that scenario, you merely forfeit the death benefit and all premium payments made to the insurance.
Even though you deem it a waste of money, this situation has some benefits. First of all, congrats on living! This is the main objective of life insurance and the reason you first bought the policy. Second, you are almost definitely in good health because term life insurance companies only offer coverage to healthy individuals. This is fantastic news since it suggests you can possess a healthy and long life.
In addition, you might always buy a new life insurance policy in the future. You can still get coverage even if your rates are more expensive as you age. Therefore, you may always purchase a new policy later if you worry about insufficient coverage.
If the time does not bring your death, the period of your life insurance policy, there is no need to be concerned. Even though you will lose the death benefit and any premiums already paid, you will still be alive and have the chance to purchase new insurance later.