By Harpreet Puri
Term Life Insurance is possibly the simplest way to provide financial security for a term, but most policyholders have tended to think about what really happens when their term ends over the years. Being in the 20th year of your Term Life Insurance, it is likely that you are now at a crossroads and making some critical decisions regarding your next course of action. Canadian LIC is a very reliable name in insurance circles and, over time, has guided many clients to better solutions when faced with the same type of dilemma. Here, we shall take you through some common struggles and the options available so you are ready for what lies ahead.
Many people opt for a 20-year Term Life Insurance Policy because it aligns with their financial milestones. Policies are opted for and designed to last throughout major points in a person’s life, often raising children, paying off a mortgage, or beginning to build some sort of financial safety net.
For example, a young family may choose a 20-year policy to guard the growing household and enable mortgage payments or other financial obligations to be paid if there is an untimely death. However, a period of 20 years is very quick, and at the end of the term, there might be new issues and priorities.
Once the term ends, your coverage ends. This means that the protection that was in place for the last twenty years is no longer there. A lot of customers come to Canadian LIC with questions about what happens next. Questions asked include:
These are valid concerns that deserve careful consideration. Let’s dive into the options you have when your 20-year term ends.
One of the easiest options you have, in case your Term Life Insurance Policy ends, is renewal. Most policies allow you to renew it for another term without requiring you to take any kind of medical examination. However, renewal premiums are higher than the previous premium payments because the premium amount gets recalculated according to your present age.
Quite often, clients at Canadian LIC are surprised by the big price increase coming at renewal. For instance, a 35-year-old policyholder, who may have been paying $30 per month on a half-a-million-dollar policy, may be surprised that it now costs a staggering amount of at least $150 by age 55. So, although renewal is convenient, the option becomes less attractive when the cost is much higher.
A Term Life Insurance Policy that has a conversion option can be converted to permanent insurance without the need for any medical exam. This is particularly valuable for individuals whose health has declined, as it guarantees continued coverage.
Permanent Life Insurance not only provides lifetime coverage but also accrues cash value over the years. The cash value of a term life can be contributed to fund additional retirement income or long-term goals.
A Canadian LIC client in their late 50s shared their experience of converting their policy. Initially, they purchased a 20-year Term Policy to cover their children’s education and mortgage. By the time the policy ended, their children were independent, but the client wanted to ensure they left a financial legacy. The conversion allowed them to maintain coverage while also building cash value for future needs.
New-Term Life Insurance Policy purchases are another option if they are in good health. This is the best time to begin fresh with a new coverage period, which is usually less expensive than renewing the old policy.
The Canadian LIC has worked with many clients to come under this scheme. For example, one client in their mid-40s wanted to purchase a new policy to cover a newly bought second home. The other client chose to extend their cover so that the spouse’s financial stability came through into retirement.
Term Life Insurance Brokers at the Canadian LIC often recommend that you compare online Term Life Insurance quotes to ensure you get a competitive quotation for the best rates for a new policy. This way, you would be ensuring that you obtain a competitive value for your money while maintaining a standard amount of coverage.
At other times, it simply makes sense to allow policy coverage to lapse. If your financial obligations have diminished and your dependents no longer rely on your income, you may not need life insurance anymore.
Canadian LIC is seeing the same thing with the empty nesters- the people who have paid up their mortgages and saved enough to live decently in their retirement. By reallocating the funds that would have gone toward premiums, they’re able to focus on other priorities, such as travel, hobbies, or charitable giving.
One of the basic misconceptions is about whether Term Life Insurance can create cash value. Term life policies do not establish cash value like Permanent Policies. At the end of the term, no payout will be made unless there was a claim during the period of cover.
Term Life Insurance is one of the most straightforward ways to secure financial protection for a fixed period. However, as the years go by, many policyholders begin to wonder what happens when the term ends. If you’ve reached the 20-year mark of your Term Life Insurance Policy, you’re likely facing critical decisions about your next steps. Canadian LIC, a trusted name in the insurance industry, has helped many clients in similar situations, guiding them toward the most suitable solutions. In this blog, we’ll address the common struggles and explore your options to ensure you’re prepared for the journey ahead.
Many people opt for a 20-year Term Life Insurance Policy because it aligns with their financial milestones. These policies are designed to provide coverage during crucial stages of life, such as raising children, paying off a mortgage, or building a financial safety net.
For example, a young family may choose a 20-year policy to protect their growing household while ensuring the mortgage and other financial obligations are covered in case of an untimely death. However, 20 years can pass quickly, and by the end of the term, new challenges and priorities often emerge.
Once the term expires, the coverage provided by your policy comes to an end. This means you no longer have the protection that was in place for the past two decades. Many clients at Canadian LIC share their concerns about what happens next. Common questions include:
These are valid concerns that deserve careful consideration. Let’s dive into the options you have when your 20-year term ends.
Renewal is one of the most straightforward options available when your Term Life Insurance Policy ends. Most policies allow you to renew for another term without a medical exam. However, the renewal comes at a higher cost, as premiums are recalculated based on your current age.
At Canadian LIC, we’ve worked with clients who were surprised by the significant increase in premiums upon renewal. For instance, a 35-year-old policyholder who initially paid $30 per month for a $500,000 policy might find that the cost has jumped to $150 or more at age 55. While the convenience of renewal is appealing, the higher cost often prompts people to explore alternative options.
If your Term Life Insurance Policy includes a conversion option, you can convert it to a Permanent Policy without undergoing a medical exam. This is particularly valuable for individuals whose health has declined, as it guarantees continued coverage.
Permanent Life Insurance not only provides lifelong coverage but also builds cash value over time. This Term Life Insurance Cash Value can be used for various financial purposes, such as supplementing retirement income or funding long-term goals.
A Canadian LIC client in their late 50s shared their experience of converting their policy. Initially, they purchased a 20-year Term Policy to cover their children’s education and mortgage. By the time the policy ended, their children were independent, but the client wanted to ensure they left a financial legacy. The conversion allowed them to maintain coverage while also building cash value for future needs.
For those in good health, purchasing a new Term Life Insurance Policy is another option. This allows you to start fresh with a new coverage period, often at a lower cost than renewing the old policy.
Canadian LIC has worked with many clients who opted for this route. For example, one client in their mid-40s decided to buy a new policy to protect a second home they had recently purchased. Another client chose to extend their coverage to ensure their spouse’s financial stability through retirement.
Term Life Insurance Brokers at Canadian LIC often recommend comparing Term Life Insurance Quotes Online to find the most competitive rates for a new policy. This approach ensures you’re getting the best value for your money while maintaining adequate coverage.
In some cases, letting the policy lapse is a practical decision. If your financial obligations have diminished and your dependents no longer rely on your income, you may not need life insurance anymore.
Canadian LIC has seen this scenario play out with empty nesters who have paid off their mortgage and saved enough for retirement. By reallocating the funds that would have gone toward premiums, they’re able to focus on other priorities, such as travel, hobbies, or charitable giving.
One common point of confusion is whether Term Life Insurance Policies build cash value. Unlike permanent policies, Term Life Insurance does not accumulate cash value. Once the term ends, you do not receive any payout unless a claim was made during the coverage period.
At Canadian LIC, clients often express disappointment when they realize their premiums didn’t result in a financial return. That is why you must know the alternatives in advance and consider switching to a product which can provide a cash value if it meets your needs.
The end of a 20-year Term Life Insurance Policy is not just an endpoint—it’s an opportunity to reassess your needs and plan for the future. Here are some things you can do to make a good decision:
While it’s true that some people may not need life insurance anymore, others may find that new priorities have emerged, such as ensuring their spouse’s financial security or leaving a legacy.
You need to explore alternatives to renew your policy to avoid unnecessarily high premiums. Comparing options can help you find a more affordable solution.
One client, a Canadian LIC customer, has a 20-year Term Policy that he says helped him sleep far better at night, knowing his family was protected. When it ended, he felt lost and unsure of what to do. Upon discussion with our broker, he determined that he needed a much smaller Permanent Policy that would give him not only coverage but also cash value.
Another customer, a business owner, purchased a Term Policy in an effort to eliminate any outstanding loans at the time of death so that the family would not have to deal with them upon his death. These are just two examples of people who needed Term Insurance for various reasons, which explains why customized advice and planning can often be so worthwhile.
The approaching end of a 20-year Term Life Insurance Policy is definitely one of the most critical events in one’s life. Knowing all options and consulting an expert can be your first step in providing the best choice for your future. Renew, convert, or buy a new one—Canadian LIC is there to help. Our team of experienced Term Life Insurance Brokers is dedicated to finding the right solution for unique needs.
Your finances deserve nothing but the best. Reach out to Canadian LIC today and take control of your insurance journey.
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