Whilst most people understand that a term life insurance policy will pay out a fixed sum to their loved ones, not everyone really thinks about what would happen if they lived past the end of their policy. The average life expectancy in the United Kingdom is just over 87 years of age for men and a little over 90 years of age for women, so it stands to reason that it’s going to be something more and more people are going to have to consider.
Unlike whole-of-life life insurance policies, term life insurance expires on a set day and if you outlive that date, the payout is forfeited. Many think of term life insurance as ‘putting money away for the future’, however, what isn’t considered nearly as much as it should be is what happens after the policy runs out. It involves looking forwards seemingly a long way into the future, but it’s entirely necessary.
“So, What Happens to My Term Life Premiums?”
Metaphorically speaking, when you pay your life insurance premiums, you’re paying into a big pot that’s managed by the life insurance company. When a death benefit is paid out to anyone, it’s paid out of this pot and if you were to pass away, the same would happen for you.
Sadly – and a frightening amount of term life insurance policy holders aren’t aware of this – if you outlive the term specified on your term life insurance, you get nothing. The only way you’d get anything out of your term life insurance policy in this scenario is if you’ve had the wisdom to take out return-of-premium life insurance, where you get back everything you paid in.
What to Do if This Is You
If what we’ve spoken about here is something that sounds familiar to you and you have a term life insurance policy that’s nearing it’s end, you likely be wondering what you should do about it. Well, the answer to that question is simple enough, as you’ll need to look into either converting your cover into a ‘whole of life’ policy or taking out new whole of life cover with another company.
If you do convert your life term policy when it’s nearing its end, you can expect a significant increase in your premiums, which is why many people decide to take out a new policy. This is a much more affordable route to gaining the cover you need. Whole-of-life cover will then pay out when you need it to and look after your loved ones should you pass away.
Know Where You Stand
Whatever aspect of your life you’re talking about, knowing where you stand is so important. Even more so when you’re talking about life insurance. If you have a life term policy and you have no idea about what to do if and when it expires, you need to really consider what steps you need to take to properly protect your loved ones when you die. If you’re not going to sort it out, no-one else will and it’s your family who will pay the penalty.
At BeMoneySavvy.co.uk, we are constantly striving to provide the best insurance policies that absolutely put the needs of our customers first. In general, the insurance industry gets a bad press, but our founders understood the need to provide transparent services that entirely meet our customers’ needs. It’s the very least we think you deserve.
If you would like to find out any more about what we’ve talked about here or about life insurance in general, head over to www.bemoneysavvy.co.uk where you’ll find everything you need. Alternatively, if you need some more immediate help, give our friendly experts a call on 0161 537 0555 today and we can provide some much needed clarification.
Thanks for reading. We’ll be back very soon with more advice, tips and hints from the world of unconfused insurance assistance.