What happens when term life insurance expires?

Term life insurance can help safeguard your family if you die within the term period, provided your premiums are paid. If your policy is active and you die before the term ends, your beneficiary receives a death benefit. These funds can help replace your income and cover expenses like housing, daily living costs or your children's education. You may have purchased a term life contract years or even decades ago. Now, as you're approaching the end of the coverage period, you want to know what happens when term life insurance expires. Here's what to consider.

Term life insurance offers temporary coverage for a fixed duration—commonly 10, 15, 20 or 30 years—during which a death benefit is paid if the insured passes away with an active policy. When the term ends, if you're still alive, the policy expires and protection stops. That means your loved ones won't receive a death benefit from that policy, and you can't get additional financial benefits or cash back from not using it. You may have originally purchased a term life insurance contract to help protect your spouse, cover a mortgage or provide for young children. Now that the term is ending, you'll need to consider whether to renew, convert, buy new coverage or go without life insurance.

When your term life insurance ends and you're still living, the policy automatically expires and coverage stops. You don't need to cancel your policy. Once expired, the protection you put in place years ago is no longer active.

You may cancel your policy any time before the term ends. Unlike with some permanent insurance contracts, there are usually no surrender charges or cancellation fees. But, unless you cancel within the specified "free look" period of coverage (usually at the start of the contract), you don't receive any refunds for canceling. As the expiration date approaches, it's important to start weighing your options. Applying for new coverage can take weeks to months, especially if underwriting or a medical exam is required, so consider beginning the process at least six months before your policy ends to avoid a gap in protection.

When your term life policy expires, you typically have four post-expiration options: renew under a renewability clause, convert to permanent coverage, apply for a new policy or discontinue coverage.

Before deciding, speak with your family and consider your needs. There's no single correct answer; it depends on what works best for your financial situation. Here are the different paths you could take:

Sometimes situations change, and you may need to adjust your life insurance coverage to help meet your family's financial needs for a bit longer. Depending on the policy, you may be able to renew your contract through a renewability clause. If you can renew, it's usually offered on a year-to-year basis up to a certain age, often well into your 90s. Continuing coverage keeps your death benefit active, and you likely won't have to go through underwriting again or take another medical exam. And if you no longer need coverage later, you can cancel it without penalty. However, premiums typically increase each year you renew. Depending on your budget, coverage needs and costs, it may not make financial sense to renew annually. In that case, buying a new policy could be a better fit.

If your contract allows, you may be able to convert your term life insurance into a permanent life insurance policy before the end of the term. Check your contract terms to confirm if conversion is allowed and when the conversion period expires. Converting to permanent life insurance may be beneficial if your health has declined, as it allows continued coverage without a new medical exam and locks in lifetime protection. Premiums are based on your age at the time of conversion, but you usually don't need another medical exam. A new permanent contract can provide protection for the rest of your life, which may be beneficial if you have more recent health issues. If you're considering a term-to-permanent life insurance conversion, provisions vary, so review your policy carefully and plan ahead. Some policies may require a conversion a year or more before the term ends.

When your current term life insurance ends, purchasing a new contract can offer continued security for your future. However, before buying, review your current finances, future goals and your family's needs. A new term life policy may offer cost-effective coverage for younger, healthier applicants, while permanent life insurance provides lifelong protection and potential cash value accumulation. If you're older or have health concerns, permanent coverage offers lifelong protection, but typically with higher premiums. Consider your stage of life and future financial commitments. Are you closer to retirement or still growing your family? Different parts of your journey can affect what type and amount of coverage makes the most sense. Note that buying a new life insurance policy typically triggers an underwriting process to determine your eligibility.

Opting out of life insurance may be suitable if you’re debt-free, have no dependents and possess sufficient savings or retirement income to cover final expenses. If you're older, debt-free and no one depends on your income, you may not need a death benefit. Another option is to consider a smaller policy, such as final expenses insurance or burial coverage. These pay out a smaller death benefit that can help cover end-of-life and funeral costs so loved ones don't have to pay out of pocket. Some people prefer to set aside savings earmarked for these expenses to cover costs. If you have family or others who rely on your income, not having life insurance could leave them vulnerable. They may not have the resources to cover expenses like housing payments or child care costs without your financial contribution. Employer-provided coverage can help, but it's often limited and not portable to your next job.