What to Do When Your Term Life Insurance Is Ending

 

NEW YORK (Reuters) - Joe Nattiero faces what could be called a “good problem.”

About 20 years ago, her 64-year-old Westfield, New Jersey resident took out term life insurance to protect her family in the worst case.

However, that policy is due to expire next year, and at Natiero's age, if he decides to extend his coverage, the premium will increase.

Clearly not being there is better than the alternatives. But questions arise for Nattiero and all the other policyholders in his situation.

"Do you still need this?"

This is a difficult decision that can raise some pretty big existential questions. Such:

How much time is left? how is my health? Is it still important to secure your family's financial future?

"It's actually a good time to look at your life insurance needs and decide if it's right, too little or too much," said Scott Bishop, a planner at Houston-based Financial. ' said.

Remember, there are many types of life insurance on the market, and the “permanent” version of life insurance does not face this conundrum. These types offer different benefits depending on the policy – ​​etc. B. They have no expiration date, include options for investment growth, and have a cash value element that can be withdrawn or borrowed but much more expensive. Term insurance is suitable for those who prefer a simple product with low monthly premiums. According to aggregator site Term4Sale's estimates, the typical monthly cost for a healthy 30-year-old man to purchase his 20-year $500,000 policy (the most common term and amount) is 1 month It ranges from $19 to $28 per. com.

So, as the 'deadline' approaches, there are several options to consider.

Let's reduce

The main reason for life insurance is to protect your family early in your career. But with enough wealth, the equation changes.

"Ideally, they might buy term insurance when they're young, have young children and a large mortgage," says Kayla Johnson, a financial planner in Wilmington, North Carolina. "Now they're retiring, the kids are out of the house, the mortgage is paid off, and at this point, I'm hoping the life insurance goes to waste."

Now that Natiello's two children are out of college and he has general insurance, the former Wall Street trader decided to let his liability insurance expire.

Extend your current policy

You can choose to continue running your meter with existing policies that are typically updated annually. The advantage of this is that you do not need to undergo further medical examinations to receive approval.

Disadvantages:

As insurers take on more risks, premiums will increase at previous levels.

“They can renew their current contract, but because the person is not underwriting, the cost will likely be significantly higher [than buying a new contract],” said insurance from industry group LIMRA. Elaine Tumicki, Director of Product Research, said. Purchase new term policy

If your original term insurance policy has expired and you are still in good health, look for a new term policy.

Don't get ready for another underwriting process and expect the same rewards.According to Term4Sale.com, if a healthy 50-year-old man purchases 20 years of insurance with his $500,000 coverage, the monthly You will see offers for monthly premiums from $70 to $100. (One way to manage these bonuses:

You can get insurance at a lower price than before. )

Also, keep in mind that even getting a new policy can be difficult if you have health issues.

convert to other cover

Another option is to convert term into permanent coverage, which some insurers allow, depending on the details of your current policy.

Amanda Cool, senior vice president and head of life insurance products at insurer New York Life, said: .

Even better if the converted policy includes a long-term care component designed to support future costs associated with disability, chronic illness, or nursing homes.

“Can you change term insurance to whole life?” asks Michelle Gessner, her planner at Houston-based Financial. “If, as a rider, you can get long-term care benefits through a separate life insurance policy, that might be a good way to go.”

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