Affordable Life Insurance Protection for Your Family
When Does Term Life
A term life insurance policy ends or expires at the end of the policy term you choose when you take out your coverage.
Your coverage term starting date and expiration date are stated on the declaration page of your life insurance policy.
Example: If you purchase a 10-year term life policy, that starts coverage at 12:01 am on December 1, 2017 – then the coverage will end at 12:01 am on December 1, 2027.
Make sure to review your policy for your exact expiration of coverage and ask your insurance agent, broker or carrier about any questions you have regarding when your life insurance coverage ends.
What to Do When Your Term Life Insurance Expires
What are my options when my initial term life insurance coverage expires?
Term Life Insurance Options at Expiration Include:
Buy a New Life Insurance Policy – You can purchase a new life insurance plan when your current coverage expires. Your new premium will be based on your age and health at the time.
Renew Your Term Life Policy – If you have a renewable term life policy you can choose to renew your coverage by a specific date listed in your original policy. The renewal plan may offer coverage for a term of up to 10 years or more. Your renewal policy premium will be based on your age at time of renewal, but you will not be required to take a medical exam to prove your insurability.
Convert Your Policy to Permanent Coverage – If your policy provides the option of convertibility, you may be able to convert your term insurance into a permanent life insurance policy by a specific date listed in your policy.
Let Your Coverage End – You could choose to go without life insurance coverage if you no longer have a need for life insurance protection.
Stagger or Layer Your Coverage Terms – You can purchase more than one life insurance policy to meet your various needs. Your life insurance needs may decrease over time, so purchasing coverage for different periods of time will meet your specific needs at a lower overall cost.
By staggering your term life insurance policies you get the coverage you need to protect several different needs at a lower cost.
For Example: You could buy a 30-year term life policy to provide mortgage protection until your loan is fully repaid. In addition, you could buy a separate 20-year term life policy to guarantee your five year old child has the money needed to pay for a college education.
Life Insurance Policy Dates
The dates regarding your life insurance coverage are very important to the coverage provided by your policy.
The critical dates in a policy are Issue Date, Policy Date and Effective Date of coverage. The insurance carriers have their own definitions of these terms.
However, the generally understood meaning of these terms include the following:
Issue Date – The date on which the insurance company approves and accepts your application for coverage.
Policy Date – The date written on the life insurance policy. These two may be the same, but some insurance carriers often add a few days to the issue date to name a policy date.
Effective Date – is the date on which the legal obligation by the insurance company is created.
The policy date is important is important because so many time periods under the policy start with it:
The suicide and contestable periods, due dates of renewal premiums, expiration date of grace periods, availability and amount of non-forfeiture values and the duration of any extended term insurance.
The effective date is significant because it is the date on which the insurance company becomes liable under the contract. Insurance companies usually try to make the effective date very clear on their policies and define it in the policy and the application.
The date on which a policy first takes effect is determined by several factors, such as whether a premium was paid with the application and if a conditional receipt was given for the premium if a premium was paid.
Almost all applications read that coverage is not effective until the policy is delivered and the first premium is paid. Therefore, these criteria must be met before the policy is considered to be in place.
Backdating a policy usually results in different issue and effective dates. In that circumstance, premium due dates are ordinarily computed from the date of issue, while contestable and suicide periods run from the effective date. The effective date under a conditional receipt depends on the language of the receipt and state law.
Keep in mind, there are policy definitional issues, state law issues and judicial interpretations that may apply to the dates stated in your life insurance policy and how coverage is applied.
Reviewing Your Life Insurance Declarations Page
The first few pages of a life insurance policy are basically a summary of the coverage and details of the insured. In most policies, the first page states the name of the insurance company, the type of plan you are purchasing, the name of the insured, the policy owner and the "free-look" period terms.
Life insurance policies have a trial period, often referred to as the "free-look period" or "right to return", which gives the policy holder a certain number of days – generally 10 to 30 days – to cancel the policy without penalty.
After the cover page is the schedule of benefits, also called the declarations page. There may be additional information included, and the schedule of benefits can be multiple pages.
Personal Information In Your Life Insurance Policy
Benefit Amount – The amount to be paid upon the insured’s death.
Policy Type – Specifies a term life or permanent life insurance policy.
Premium Amount – How much you have to pay for the life insurance coverage.
Policy Issue Date – The date the life insurance policy is issued.
Policy Number – The unique number assigned to your life insurance policy.
Risk Class – This is the risk class you have been assigned. For example, smoker versus non-smoker.
Attached Riders – A rider is an additional condition to the established contract which may provide additional coverage.
Beneficiary – The primary beneficiary and secondary beneficiary may or may not be listed in the schedule of benefits page.
Name of the Insured – The person on whom the policy is purchased and the one upon whose death the policy will issue payment. This is the person whose lifestyle, age, and medical information are looked at for rating purposes in determining how much the life insurance policy will cost.
Name of Policy Owner – The person who has applied for and set up the policy and is paying the premium on it (also called the policyholder). The owner is the only one who has access to policy information and can change the beneficiaries listed on the life insurance policy.
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