11 May What Happens If a Veteran Outlives Their Term Life Insurance?
Life insurance is a mandatory step to secure the lives of your loved ones when you leave them behind. It offers financial scrutiny and helps your family cover up their expenses if the unexpected happens.
Generally, life insurance is of two types- whole life insurance and term life insurance. Unlike whole life insurance, where your interest is covered throughout your life, a term life insurance generally offers coverage for a specific period, mostly 10, 20, or 30 years.
If you die during this specific term, your family will receive a set amount from the insurance company. The money can be used to consolidate debt, pay bills or support the family members after you die.
But what exactly happens if you outlive your term life insurance? Read on to find out what to do when a Veteran survives their term life insurance.
What Exactly Is Term Life Insurance?
Term life insurance, also known as pure life insurance, is a type of insurance policy that provides death benefits to your family members if you die within a specific period.
Usually, term life insurance can have 10, 20, or 30 years. This means that if the insured dies during the policy term, the insurance company will provide a specific amount of monetary benefit to the family members.
The premiums you pay to the company depend upon several factors like your age, health conditions, habits, lifestyle, and gender. The cash benefit your family would receive after your death can be used to settle consumer debt, mortgage debt, or your funeral cost.
Related Article: How Do Accelerated Death Benefits Work for Veterans?
What Happens if You Outlive Your Term Life Insurance?
If you survive your term life insurance, you can either purchase a new term life insurance that would provide you coverage for a specific period or convert the expired term life policy into a whole life insurance policy.
A whole life insurance policy would provide coverage throughout your life. Some companies even offer guaranteed renewability provision that offers guaranteed coverage, given you pay the premiums on time. In this case, you might not be required to appear for a physical examination.
What Happens if You Die Before Your Life Insurance Term?
If you die during the term of your life insurance, the insurance company will pay the claim to your family. The monetary stipend can be used to consolidate debt, pay bills or conduct your funeral.
However, if the policy expires before you die, you or your family will not receive the payout.
Related Article: What is VMLI, Veterans’ Mortgage Life Insurance
What Happens When Your Policy Expires?
Frankly speaking, when your term life insurance is about to expire, you can just let the coverage go and live without any policy. This is the option people with independent children choose.
However, if your family members are still dependent upon you financially, getting life insurance is mandatory.
When your policy is about to expire, you will no longer be covered. This means that if you die after the policy lapses, your family will not receive any monetary benefits. Here are your options when your policy is about to expire:
Extend Your Term Life Insurance
Technically, you can renew your term life every year because most policies offer a guaranteed renewability feature that allows you to qualify for a new coverage once the current policy expires without any medical examination. However, this might increase the premium cost year after another.
Convert Term Life Into a Whole Life Insurance Policy
Rather than extending your policy every year, it is better to convert your term life insurance into whole life insurance. Then, you will be covered throughout your life span and would not have to worry about extending the policy once it expires. However, it is vital to get in touch with your insurance provider to figure out the available options.
Get a New Life Insurance Policy
Instead of extending the term life insurance policy, you can simply cancel the policy and shop for a new one. However, you would be required to appear for a medical examination in this case. While this can be a little hectic, it might be a good option if you can qualify for lower rates at the same or more coverage.
When Should I Buy More Coverage?
You should consider buying new coverage when your term life policy is about to expire, or you are not satisfied with your current policy.
If you still have your family dependent upon you for funds, it is recommended to keep your interest covered at all times in case the unexpected happens.
Related Article: How Does Decreasing Term Life Insurance Work
Converting Term Life to Whole Life Insurance
Term life insurance expires. While you might pay a little more than usual, you can rest assured that a term life conversion will be covered throughout your life.
A whole life insurance policy would provide your family with monetary benefits after your death, regardless of a specific term. You can use the term conversion rider to convert your term life policy into a whole life insurance policy. However, it is recommended to contact the insurance provider to get all the necessary details.
Purchasing a New Term Policy
Your needs can change with time. For example, after ten years of your term life insurance policy, you might need more coverage. Therefore, if your policy is about to expire, you must ask yourself if you are content with this policy. If you are satisfied with it, you can simply extend the policy. However, if you wish to change the procedure, you can shop with different vendors and finalize the best rate.
Final Expenses Insurance
Simply put, a final expenses insurance or funeral insurance is small whole life insurance that comes with a coverage of $2,000 to $5,000. This amount can be used for your funeral service after your death and is paid to your beneficiary.
What Life Insurance Policy Never Expires?
A whole life insurance policy offers lifetime coverage to the insured, and this means that the policy will never expire, and your interests will always be covered.
However, while this might seem like a better option, it might not suit you. As stated above, your needs change with time. Depending on your needs, you might need more or less coverage as time passes. Therefore, getting a term life insurance and extending it according to your needs can be a better option than sticking to just one policy throughout your life.
Related Article: Find Affordable Life Insurance for Veterans
What if You No Longer Need Coverage?
You might no longer need coverage if you don’t have dependents in your family or your children are big enough to care for their own financial needs. You might also not require coverage if you have enough savings to support your family after you are gone.
However, despite your needs, it is always recommended to have the coverage ready, even if it is minimal coverage, so that your family can rest assured once you are gone.
No one knows what the future holds, and for that reason, it’s important to have a plan in place in case something happens. If you are a veteran and have term life insurance, what happens if you outlive your policy?
Thankfully, there are a few things that can happen. Your beneficiaries could receive the death benefit payout, or the insurance company could offer a refund of all premiums paid. In some cases, the life insurance policy may be extended if you are unable to find a new policy. Talk to your insurance agent to learn what options are available to you.
Whatever happens, it’s important to have a plan in place so that your loved ones are taken care of in the event of your death. Make sure to review your life insurance policy regularly and update your beneficiaries as needed. Having peace of mind is well worth the effort.