Most life insurance agents would agree that term life insurance is the best way of protecting your family. Many folks purchased life insurance when their family was young and often bought the term that fit their budgets, with policy coveage that lasted 10,15, or 20 years. But when the policy period ends what do you do?  Good planning is in order when you buy. What will happen when the term runs out and you want or need coverage for a longer time?  Maybe choosing a longer plan would often be better down life’s road, such as a 30 year term life policy.  Making the right decision could save you a lot of money down the road..

In theory, you might assume that you won’t need insurance after 20 years. Your kids will be grown and you’ll have enough savings to support your spouse if you die prematurely. In practice (and after a lost investment decade), not many people fit that imaginary profile.

For example, maybe you married late, or remarried, and have young children. Maybe you lost your pension or part of your savings through bad luck or bad investments. Maybe you didn’t save at all.

Plan on buying new insurance when your term policy runs out. You have three choices—two of them affordable and one for desperation only:

(1) If you’re in good health (or good enough), shop for new level term insurance. You’ll have to pass a medical exam – which the majority of buyers can — and pay the appropriate premium for someone of your age. You probably won’t need as large a policy as the one you bought when you were young, which helps hold down the price.

Don’t automatically buy from the same company that insures you now. Another insurer might be offering something cheaper. A good place for comparison shopping is the website www.wequote.com

(2) If you’re in poor health, convert your existing term policy to permanent insurance. You’ll be offered whatever types of conversion policies the company has on its shelf at the time. There’s no medical exam. You’ll pay much more than you were paying for term insurance but can limit the cost by buying a smaller policy. That should work, because you’re older and don’t need as many years of protection as you did before.

Good timing is important! You must convert within the time period that the term policy allows. Some 20-year policies keep the window open only for the first 10 years. Check this with your insurance agent or read the policy yourself. If you wait too long, you lose your chance.

But don’t convert any earlier than you have to. Say, for example, that you have a heart attack half way through a 20-year term policy. Your agent might urge you to switch to cash-value coverage right away. But why? If you die, your heirs will collect on your current term policy. If you live, you might be considered a better risk 10 years from now than you are today.

(3) If you’re in poor health and missed the deadline for switching to permanent insurance, you’ve got trouble. You can renew your expiring level-term coverage without a health exam but only at incredibly high premiums. Worse, the cost will jump every year, by large amounts. This is worth doing only at death’s door. You probably won’t be able to sustain the cost of the policy for very long.

So think about future coverage well before the end of the term. If you suspect that you won’t be able to pass a health exam, convert your term policy to cash-value coverage while you still can.

Caution when choosing term:

You might be leaning toward purchasing a 10-year term policy, even though you’ll need coverage for 20 years or more. The premiums will be less now, but you will have to buy a new policy based on your “then” age for the second policy.  If you need 20 years of coverage, buy 20-year term. If you expect to need coverage for 30 years, buy 30 year term.