What Happens to Term Insurance After Maturity?

Term Life Insurance is fast becoming one of the steps toward peace of mind for many Canadians who are facing financial loss. Most Term Life Insurance Policies typically cover an individual for an undetermined number of years, ten, twenty, or thirty. At that point, it provides a guaranteed death benefit to your policy beneficiaries if you die in the years covered. However, what happens when the term matures, or rather, runs out? This may leave countless numbers of policyholders, as well as their families, clueless about what to do next.

In this blog, we will walk through what is available once a Term Life Insurance policy matures. Using simple examples and drawing from the insights provided by Canadian LIC, the best insurance brokerage firm, we will delve into real-life considerations for term insurance maturity and having the confidence to make an informed choice.

What Does "Maturity" Mean in Term Life Insurance?

Maturity" is jargon used when referring to a Term Life Insurance Policy reaching the end of its time expiration. So, if you have a Term Life Insurance policy with a term length of 20 years, it would be considered mature at the end of year 20. If the person insured is still alive at that point, then the policy would simply expire, and coverage ends without paying anything.

This often comes as a surprise to policyholders who would have expected a benefit after paying their premiums for so long. Term Life Insurance Policies are designed to serve as financial security over a specific term. Since these have no associated cash value, they lapse without disbursal if the term runs out with the policyholder alive.

Options for When a Term Life Insurance Policy Matures

When Term Life Insurance Policies mature, policyholders have several options:

• Renew the Policy for Another Term: Some Term Life Insurance Policies offer a renewal option at the end of the term. The renewal allows the policyholder to keep the coverage active for an additional term, but it’s important to note that the new premiums are typically higher, reflecting the policyholder's age and any health changes. For those who still want coverage but face new health concerns, renewal can be a convenient choice. Term Life Insurance Agents at Canadian LIC often guide clients through this process, helping them understand the new Term Life Insurance Rates and options available.
• Convert to a Permanent Policy: Many Term Life Insurance Policies offer a conversion option , allowing the policyholder to switch to a permanent life insurance policy without needing a medical exam. This option is valuable for policyholders who want lifelong coverage and are concerned about future insurability. By converting to permanent coverage, you can lock in protection without worrying about future health changes impacting your coverage. However, it’s worth noting that the premiums for permanent insurance will be higher than Term Life Insurance Rates .
• Purchase a New Term Policy: For those in good health who still need coverage, buying a new Term Life Insurance policy can be a cost-effective solution. Term Life Insurance Quotes can vary based on age and health, but younger policyholders or those in good health may find affordable premiums for a new term. Canadian LIC agents can provide updated quotes and help clients find a term policy that matches their needs and budget.
• Allow the Policy to Expire: If the policyholder no longer needs coverage—perhaps because debts are paid off and there are no dependents—they may decide to let the policy expire at maturity. For some clients, this decision comes with a sense of relief, knowing they have fulfilled their financial obligations. However, if there’s still a desire for coverage, speaking to Term Life Insurance Agents can provide clarity on other affordable options.

Real-Life Scenario: Term Life Insurance Options after Maturity

At Canadian LIC, we face myriad circumstances when clients' policies mature. Recently, we have had a client, Diane, who had a Term Life Insurance policy for 20 years. When her policy matured to the set maturity date, she was confused about what next step to take. Her kids are grown, and she is close to paying off her mortgage. But she wanted a financial legacy left for her family.

Under the recommendation of her Term Life Insurance agent, Diane decided to convert part of her term policy into permanent insurance. In this way, she was able to maintain a certain amount of protection for future needs but was also allowed adjustments due to changing circumstances. Such an experience illustrates why contemplating such options with the assistance of astute agents can be useful in making choices tailored to a particular situation .

Things to Consider Before Renewing, Converting, or Replacing Term Insurance

Choosing the right path for your Term Life Insurance at maturity depends on several factors:

• Current Health: If health has changed since the original policy purchase, converting or renewing may be more affordable than reapplying for new term insurance.
• Financial Needs: Policyholders who still have dependents or financial obligations may find renewing or converting beneficial, while those who are debt-free and financially secure may not need continued coverage.
• Cost of New Term Life Insurance Rates: If you’re considering a new term policy , it’s essential to review updated Term Life Insurance Quotes to understand the cost implications.

Working with a licensed Term Life Insurance agent can provide clarity and help you weigh these considerations against your personal and financial goals.

What to Ask Term Life Insurance Agents When a Policy Matures

If you’re approaching the end of a Term Life Insurance policy, here are some key questions to ask your insurance agent:

• Are there renewal options available, and what will the premiums be?
• Does my policy have a conversion option, and how does it work?
• What are the current Term Life Insurance Rates if I want to apply for a new policy?
• Are there any alternatives to keep coverage but lower my premiums?

Experienced agents can enlighten one about these options and hence guide you to a better decision. Experienced agents of Canadian LIC help clients with policy maturity by guiding them through their questions and ensuring they feel confident with their decisions.

Final Thoughts

This knowledge of what happens with term insurance at maturity allows you to decide how you would want your term life to go from here. This could mean renewal, conversion, application for a new policy, or even a policy expiring. This knowledge helps ensure your life insurance coverage works with you in all the phases of your life. Term Life Insurance Rates and options are different, and knowledgeable Term Life Insurance Agents can be huge assets as you seek to make the right decision for yourself.

Let this remind you that even as your policy matures, life insurance still remains an important source in securing the future of your family. Review Term Life Insurance Quotes and talk to agents to create a plan that will help your current stage of life so you can achieve peace of mind and financial stability.

FAQs

Can I get money back when my Term Life Insurance policy matures?

No, Term Life Insurance Policies do not have a cash value, so there is no payout at maturity. The policy only pays a benefit if the policyholder passes away during the term.

What happens to Term Life Insurance Rates if I renew my policy?

When you renew a Term Life Insurance policy, premiums will increase based on your current age and health. Renewal rates are often higher than the original policy rates.

Can I convert my Term Life Insurance to whole life insurance without a medical exam?

Yes, many term policies offer a conversion option that allows you to switch to a permanent policy without additional medical underwriting, regardless of health changes.

Is buying a new term policy cheaper than renewing my old one?

It can be, especially if you’re still relatively young and healthy. Checking Term Life Insurance Quotes for new policies helps you compare costs and find the most affordable option.

Do I need an agent to handle my Term Life Insurance renewal or conversion?

While it’s possible to renew or convert independently, working with a Term Life Insurance agent ensures you understand all your options and choose the best one for your situation.