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You may be asking yourself, “what should I do when my term life insurance expires?”. If your life insurance is nearing expiration, you should act fast.

There are essentially three options for when your term life insurance expires: renew, convert, or sell the policy in a life insurance settlement. However, you must take action now because all of these options entirely evaporate once the life insurance policy has lapsed or expired.

Renewing Your Life Insurance

A term life insurance policy is usually 10, 15, or 20 years, though different terms do exist. Just before your term life insurance expires, you can usually renew it for a similar policy. However, you should be aware that the renewal may be at a higher rate. The policy will still be less costly than a whole life insurance, but of course it may also expire again: it will only be valid for that term. During the renewal process, you may need to go through a medical examination again. You may also find that your premiums go up due to major life changes, such as a change in marital status or having children. At this point, you might also want to consider whether your coverage amount is still enough.

Converting Your Life Insurance

Instead of renewing your life insurance policy, you can change the policy into a different type of policy that will no longer expire and that will build value for you. Only some policies are a convertible term insurance policy, so you’ll need to check first. A permanent life insurance policy will never expire. It will usually be more expensive monthly, but it will also pay out more; in addition to insurance premiums, you are paying into an investment account that will grow and that can be borrowed against. You don’t need to wait to convert your life insurance policy — and, in fact, you usually shouldn’t. The earlier you decide to convert a term life policy to a permanent life policy, the better, as you’ll be able to save more.

Sell your life insurance in a life insurance settlement

Converting your life insurance policy can be costly, and sometimes you no longer need your insurance. In these situations, you can sell part or all of the policy instead. A life settlement company may offer to buy part or all of your policy. If you qualify, you could receive a cash payout in exchange for your life insurance policy. This gives you the money that you need today while you are still living, and all future life insurance premiums are covered by the life insurance settlement provider. This is a particularly good option if you no longer need or can no longer afford your insurance.

Any of these options may be the best option depending on your personal situation, age, and health. But regardless, you should always take deliberate action before your policy expires and you just let it lapse. If the policy does lapse, you won’t be able to do anything at all.