Life insurance gives your beneficiaries a cash payment when you pass away. But what happens if you live longer than the actual policy? We answer the question and explore your options so that you can plan for your family’s future.
Do I get money back if I live longer than my life insurance?
As a broad rule, no. When you take out term life insurance, your policy is only active for a limited time. This could be anything from one year to 50 years and it’s something you’ll agree with your provider at the time you buy the policy.
When the policy reaches its expiry date, it will simply end. There is no cash benefit or payout if you outlive it. Your premiums will not be returned either.
Can I renew or increase the term of my life insurance policy?
This will depend on the conditions of your policy. Some providers will let you extend the term before it ends so you’ll need to ensure this is done before it expires. Bear in mind that this could lead to higher premiums as life insurance becomes more expensive as we age.
What are my options when term life insurance ends?
When the policy ends, you can:
- Do nothing and let the policy expire
- Take out a new life insurance policy
- Look at alternatives; for example, critical illness cover which is another type of insurance product
Where do my premiums go?
Premiums from all policyholders are pooled and used to fund payouts when they pass away.
What other life insurance options are there?
When your term life insurance ends, you can take out another term policy but other options to consider, include:
Whole of life insurance
These policies are active for the whole of your life as long as you keep up with your premiums. These policies tend to be more expensive than term cover as they pay out when you pass away.
Over 50s life insurance
If you’re 50 or over, these plans guarantee acceptance regardless of any health conditions you may have. It’s worth knowing that payouts from an over 50s plan are usually lower compared to other types of life insurance, and are typically used for funeral costs or left as gifts to beneficiaries.
Plus, depending on how long you live and how much your premiums are, you could end up paying more into the policy compared to what it pays out.
Critical illness cover
Critical illness insurance pays out a cash lump sum if you’re diagnosed with an illness covered by the policy, for example, heart attack, stroke or paralysis. Policies will often cover some forms of cancer, but these will all be specified within the terms and conditions.
You can buy critical illness cover as a standalone policy, but you can also add it to your life insurance package for a small increase in price.
Is there an age limit for buying life insurance?
Yes, there are age limits when it comes to buying life insurance, but the limit varies by insurer and sometimes, by the type of policy.
With that in mind, don’t assume you can’t get cover just because you’re over the age limit for some insurers. You can still buy life insurance in your mid-80s and in some cases, in your 90s, although your choice of provider is likely to be limited.
Do I need life insurance?
If you have dependents, life insurance can be a valuable safety net, particularly if your family relies on your income. But even if your partner has a regular salary, life insurance can help lower financial stress in the long term.
Should I take out another life insurance policy?
Ultimately, this will depend on your circumstances at the time your policy expires. Extending your policy (if that’s an option) or taking out a new plan might be worth considering if:
- You have an outstanding repayment mortgage
- You want to contribute to future family expenses, such as university fees
- You want to cover your funeral costs and leave money as a gift
Where can I find out more about life insurance?
Life insurance can be a confusing subject – there are lots of options and numerous providers all vying for your business so making a final decision can be tough.
To help clarify your options, we’ve put together a guide to our top 10 life insurance providers and answer some of your most frequently asked questions.