Some forms of life insurance plans have an expiration date, while others do not. It is dependent on the policy form.
If you have a term life insurance policy, it will expire at the end of the term you chose. If you have a permanent life insurance policy (such as whole or universal), you can keep it as long as you pay your premiums on time and in full.
How Long Does Term Life Insurance Last?
The concept of term life insurance is simple: you choose a death benefit sum and a “term,” or the period of time the policy will be in effect. Term lengths range from one to thirty years. If you pay your premiums on time and die while the policy is active, the death benefit you choose will be paid to your named beneficiary(ies).
Term policies are only valid for a set period of time. So, if you have a 20-year term life policy, it will expire 20 years after you purchase it. Unless you have a “return-of-premium” policy, if you outlive your policy, your beneficiaries will not receive a death benefit and you will not receive any income.
It may be possible to turn your term policy into a permanent policy if you choose to keep it after it expires. Keep in mind that you will normally only be able to do so for a limited amount of time during the policy’s lifetime. If you choose not to do so and are in good health, you could simply purchase a new term policy or some form of life insurance.
What About Permanent Life Insurance?
Permanent life insurance is intended to protect you for the rest of your life. However, if you live a long life, there is a caveat. Permanent policies, the most popular of which is whole life, accumulate cash value over time.
Your strategy will finally “mature” if you live long enough. Your policy will pay out the cash value of the policy when you hit the age of maturity, and your life insurance coverage will stop. Beneficiaries do not have to pay taxes on a payment they get when you die. However, a bonus due to maturity will be taxable, which is a disadvantage.
As a result of the increased life expectancy, many policies are now expected to mature at the age of 121. Older policies, on the other hand, can have a maturity age of 100.
Although it’s impossible that you’ll live to be 121, some people with older policies have lived to be 100 and have run into this problem with permanent life insurance. As a result, it’s something to bring up with your agent while looking for a permanent policy.