Your Options at the End of a Term: Renew, Convert, or Lapse

Your term life insurance policy is about to expire. You bought it 20 or 30 years ago. Now what? You have three options: renew, convert, or let it lapse.

This guide explains your options at the end of a term life insurance policy.

What Happens When Term Life Insurance Expires?

Term life insurance has an expiration date. Common terms are:

• 10 years
• 20 years
• 30 years

When the term ends:

• Coverage stops
• No death benefit is paid if you die after expiration
• You have options: renew, convert, or let it lapse

Important: You must take action before the term ends. If you do nothing, the policy lapses.

Option 1: Renew the Policy

What it means: You keep the same coverage but at a new premium rate.

How it works:

• You apply for renewal
• Insurance company sets new premium based on your current age and health
• Premiums are usually much higher
• Coverage continues for another term

Costs:

• Renewal premiums are based on your current age
• A 50-year-old pays much more than a 30-year-old
• Premiums can be 5 to 10 times higher
• No medical exam usually required

Example: You bought a 20-year term policy at age 30 for $30/month. At age 50, renewal might cost $200/month or more.

Benefits:

• Keep coverage without medical exam
• Continue protection
• Simple process

Drawbacks:

• Much higher premiums
• Premiums increase each renewal
• Eventually becomes unaffordable

Option 2: Convert to Permanent Coverage

What it means: You convert your term policy to permanent life insurance (whole life or universal life).

How it works:

• You exercise conversion option (if available)
• Convert to permanent policy
• Premiums are based on your original age (not current age)
• Coverage becomes permanent

Costs:

• Premiums are higher than term
• But based on your original age, not current age
• Permanent coverage costs more than term
• But you get cash value

Example: You bought a 20-year term policy at age 30. At age 50, you convert. Premiums are based on age 30, not age 50. This saves money compared to buying new coverage.

Benefits:

• Premiums based on original age
• Permanent coverage
• Builds cash value
• No medical exam required
• Coverage lasts your whole life

Drawbacks:

• Higher premiums than term
• Must convert before term ends (usually)
• Conversion options might be limited

Important: Not all term policies have conversion options. Check your policy. Conversion periods are usually limited (e.g., first 10 years or before age 65).

Option 3: Let It Lapse

What it means: You do nothing. The policy expires and coverage ends.

How it works:

• Term ends
• Coverage stops
• No premiums due
• No death benefit if you die

Costs:

• No ongoing costs
• But you lose coverage
• Buying new coverage costs more (older age, possible health issues)

Benefits:

• No premiums
• No ongoing costs

Drawbacks:

• Lose coverage
• No death benefit
• Buying new coverage costs more
• Might not be insurable

Which Option Should You Choose?

Choose renewal if:

• You need coverage temporarily
• You can afford higher premiums
• You do not want permanent coverage
• You are in good health (might be able to get better rates elsewhere)

Choose conversion if:

• You need permanent coverage
• You want to lock in rates based on original age
• You want cash value
• You are not insurable for new coverage

Choose lapse if:

• You no longer need coverage
• Dependents are grown and independent
• Debts are paid off
• You have other coverage

Factors to Consider

1. Your age:

• Older age means higher premiums
• Renewal becomes expensive
• Conversion might be better value

2. Your health:

• Health issues make new coverage expensive or unavailable
• Conversion avoids medical exam
• Renewal also avoids medical exam

3. Your needs:

• Do you still need coverage?
• How long do you need it?
• Do you need permanent coverage?

4. Your budget:

• Can you afford renewal premiums?
• Can you afford conversion premiums?
• Do you need coverage at all?

5. Your financial situation:

• Are dependents independent?
• Are debts paid off?
• Do you have other assets?

Common Mistakes

Not planning ahead. Do not wait until the term ends. Plan ahead.

Not checking conversion options. Conversion might be your best option. Check your policy.

Assuming renewal is best. Renewal premiums are expensive. Consider other options.

Letting it lapse without thinking. Make sure you do not need coverage before letting it lapse.

Not comparing options. Compare renewal, conversion, and new coverage. Choose the best option.

How to Decide

1. Review your needs:

• Do you still need coverage?
• How much do you need?
• How long do you need it?

2. Check your policy:

• Does it have conversion options?
• When does conversion period end?
• What are renewal terms?

3. Get quotes:

• Get renewal quote
• Get conversion quote
• Get quotes for new coverage

4. Compare options:

• Compare costs
• Compare benefits
• Consider your needs

5. Make a decision:

• Choose the best option for you
• Act before term ends
• Set up new coverage if needed

The Bottom Line

At the end of a term life policy, you have three options:

• Renew: Keep coverage at higher premiums
• Convert: Switch to permanent coverage at original age rates
• Lapse: Let coverage end

Choose based on your needs, budget, and situation. Plan ahead and compare options before the term ends.

Need help deciding what to do when your term life policy expires? Visit AgentVerified.com to find a qualified agent near you who can help you compare renewal, conversion, and new coverage options.

Looking for more information about term life insurance? Compare life insurance quotes and explore term life insurance and permanent life insurance options.