How Long Should I Keep Term Life Insurance?
Peggy Mace PRO
President and Senior Agent, Outlook Life, Most of the U.S.
My advice is to keep your Term policy until the time when premiums go up (usually, at the end of the term). The exception would be if your health improved, you lost a lot of weight, quit smoking, or something else that would allow you to get a better rate on a new policy.
Once the rate jumps up and goes into annually renewable term, the price gets so high that it is unsustainable for long. Some situations that might prompt you to keep it for a while is if you are terminally ill or have a very short need for which buying a new policy would be more of a hassle than it is worth.
It is far better to convert the policy before the price jumps up and the conversion privilege ends. You will get
a lot more for your money to convert it to permanent than pay the annually renewable rates.
As far as dropping your Term policy when the need ends, one need usually replaces another, and when that good rate is gone, it is gone. You will be surprised at how much more it will cost you to get that coverage back just due to being older. If you have been diagnosed with a serious health problem in the meantime (and isn't that why a lot of people seek life insurance, because they have just been faced with their own mortality), you may not be able to get a new Term policy at all.
So I would give it a lot of thought before dropping any Term policy unless it is to get a better policy at a lower rate, or to switch it to something permanent.
Answered on June 22, 2013Source: www.insurancelibrary.com