“How to Modify and Extend Your Term Life Insurance Policy”

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How Term Life Insurance Works

Term life insurance offers coverage for a set period, typically between 10 and 30 years. If you outlive the policy term, the coverage ends without a payout. However, you can renew or extend your term, convert to whole life, or shop for a new policy. Here’s how to ensure uninterrupted coverage.

Understanding Term Life Insurance

When purchasing a term life insurance policy, you select a death benefit and term that align with your financial goals. Terms usually range from 10 to 30 years, with premiums due monthly, quarterly, or annually. The premiums and death benefit generally remain constant throughout the term. If you pass away within the policy’s term, your beneficiary receives the death benefit. If the term ends before your death, the policy expires without a payout.

Can You Modify Your Existing Term Life Insurance Policy?

Yes, you can modify your term life insurance policy before it expires. Here are your options:

Renew Your Term Policy

If your policy includes a guaranteed renewable clause, you can renew or extend it without a new underwriting process or medical exam. However, premiums will likely increase due to your age, and renewals are typically for one-year terms, leading to annual premium hikes. If you need long-term coverage, consider converting to whole life or shopping for a new term policy.

Convert to Whole Life Insurance

If your term policy has a term conversion rider, you can convert it to a whole life policy. Whole life insurance remains in force for your entire life, provided you make premium payments. These policies build cash value over time, which you can borrow against or use to increase the death benefit.

Buy a New Policy

You can also shop for a new term life policy with the same or a different insurer. This involves a new application process and medical exam. This option is ideal if you can’t convert to whole life or need coverage for more than a few years. It’s also an opportunity to find a cheaper premium or adjust coverage to fit your current needs.

Pros and Cons of Extending Your Term Life Insurance

Extending your term life policy has its advantages and disadvantages:

Pros

• Continued coverage for a longer period.
• Maintains your relationship with the insurance company.
• May be the only option if your health has changed.

Cons

• Higher premiums.
• Possible need to convert to a whole life policy.
• Renewals may only be available in one-year terms.

The Bottom Line

When you take out a term life insurance policy, you choose a fixed term of up to 30 years. However, you can adjust the term if you need more or less coverage. Depending on your policy, you may renew, convert to whole life, or get a new policy. These options allow you to tailor your coverage to your current lifestyle.

Many states allow life insurance companies to use your credit-based insurance score when calculating premiums. If your state permits this, consider improving your credit before purchasing life insurance. You can get a free copy of your credit report and check your credit score with Experian, then address any issues you find.

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