What happens after your term life insurance ends?

Term life insurance provides valuable financial protection for a set period, but eventually that period comes to an end. When your life insurance term ends, your coverage expires and benefits cease unless you take action to continue or change your policy. When it does, many Canadians wonder what happens next and whether they’re still protected.

The short answer is that once your term life insurance ends, your coverage stops, but you still have options. The term length you choose, such as 10, 20, or 30 years, determines when your coverage ends and can impact your renewal and conversion opportunities. You can renew, convert to a permanent plan (using a conversion option if your policy includes it), apply for a new policy, or allow the coverage to lapse if you no longer need it. Knowing which path to take depends on your age, health, and ongoing financial responsibilities.

This guide explains exactly what happens at the end of your term, how renewals and conversions work in Canada, and what to do if you still need protection. Your term life insurance eligibility may also affect which options are available to you after your policy ends.

What happens after your term life insurance ends?

When your term life insurance expires, your coverage automatically ends, meaning your beneficiaries would no longer receive a death benefit if you passed away. However, most insurers give you several ways to extend or replace your protection.

Typically, you’ll receive a notice 30 to 60 days before your existing policy expires, outlining your options for that policy. You can renew your policy for another term (usually without a medical exam), convert it to permanent coverage, or apply for a new policy altogether. If you take no action, the policy simply lapses.

The right choice depends on your circumstances. If your financial obligations, like a mortgage or dependents, still exist, maintaining coverage is wise. You can achieve continued coverage by renewing your term policy or converting it to permanent insurance, both of which often do not require medical underwriting. If you decide to apply for a new policy, be aware that medical underwriting may be required. If your debts are paid off and your children are independent, you may decide you no longer need it. The key is to review your situation before your policy expires so you can make an informed decision while all options are still available.

When does term life insurance expire?

Life insurance coverage on a term policy expires as agreed upon in the insurance policy’s contracted term. A term plan provides coverage for a specific period, and once the agreed term ends, the policy expires unless renewed or converted. The term life insurance coverage period ranges from five to 40 years unless you have a yearly renewable policy, which expires yearly. Term life is a life insurance product that, unlike permanent policies, does not cover you for your entire life.

Do not wait until your term life insurance expires to take action; let’s review some of your options before and after the expiration date. If you wait until your policy expires, insurance rates may increase due to age or changes in health. Remember, coverage is only active after the first premium payment is made and approved.

What to do when your term life insurance expires

When your life insurance coverage expires, you may be able to extend it or purchase a new policy.

• Renew the existing term life policy

When you purchased your current term life insurance policy, you may have made some decisions that will make it easier to renew it. Life insurance companies typically offer a rider that allows you to renew the policy to extend the term. Many term life insurance policies allow for renewal without a medical exam. Some policies include an automatic renewal feature, which means your policy can be renewed up to a certain age without requiring a new medical exam, and the insurance company will notify you and recalculate your premiums based on your current age.

This option has some favorable benefits. For example, you will not have to shop around again for insurance. You also won’t have to prove insurability status or undergo a medical exam. This is great news, especially if your health has deteriorated and you have a health condition that would prevent you from getting life insurance coverage.

You may have some age limitations on renewals. Insurance companies will only allow renewals of term life insurance up to a certain age, usually 75.

• Convert it into a permanent life policy

Term life insurance policies have another rider, a convertible rider, that can be added to the base policy. If you chose to add this rider when you bought your original term life insurance policy, you could exercise that option based on the contracted terms. The conversion option allows you to switch your term policy to a permanent life insurance plan without undergoing additional medical underwriting, providing flexibility for long-term coverage planning.

Converting your existing term life insurance policy to a permanent one so you are covered for your whole life. This option also benefits from not having to qualify again for insurance. You may have the choice to convert to a whole life, universal life, or universal life insurance policy, depending on what your insurer offers, ensuring ongoing protection with a permanent life insurance plan.

When you convert term to permanent life insurance, remember that your annual premiums will be based on your age at the time of conversion, which means premiums will be higher on the new insurance policy. Similarly, renewal premiums for term life insurance are recalculated based on the policyholder’s attained age at the time of renewal.

You also want to be proactive and review your life insurance policy conversion requirements. Life insurance carriers usually require you to decide to convert the policy before the expiration date. Sometimes, you may need to notify them up to a year in advance.

• Purchase a new term life policy

When your term coverage expires, you may buy a new term policy. There could be many reasons to make this choice, even if you have the option to convert. You will need to apply for a new life insurance policy if your coverage ends, which typically means completing a new application and undergoing a new medical exam. Be sure to review your desired coverage amount, as adjusting your coverage can impact your premiums, renewal costs, and overall protection.

One reason to get a new policy, even if you could convert or extend your old one, is if you were rated as a health risk, increasing your premiums on a short-term policy. Let’s say you were classified as a smoker, but you needed insurance at the time. Maybe you took out a five-year term policy, and now you have quit smoking, and your health is great.

You may find this is a great time to get rid of the old policy and upgrade to a new and better one. You might even consider permanent coverage, such as a whole life insurance policy.

• Go without life insurance

The last option, and one that is not recommended, is not to purchase life insurance products. Not having a life insurance policy may jeopardize the financial support of those needing it. Final expense insurance is an alternative coverage option for those who may not need substantial protection after a term policy ends, and is specifically designed to help cover funeral costs and other end-of-life expenses.

If your term life policy has expired and you are in good health, consider permanent life insurance policies, which offer lifelong coverage.

Do you get the money after term life insurance expires?

If you outlive the term, term life insurance policies do not pay out after they expire. This is because they are designed to provide coverage for a specific period of time – usually 10, 20, or 30 years. Once that term expires, so does the coverage. Term life insurance premiums are generally lower than permanent policies because there is no payout after expiry.

A term life insurance policy has no cash value at the end. Term insurance is temporary coverage at a low cost, and one of the ways costs are reduced is by doing away with the savings component of permanent life policies. Term life insurance is often used to cover living expenses for beneficiaries, helping them manage essential costs if the policyholder passes away during the coverage period.

If you want to build cash values within the policy, you need to discuss your financial plan with your insurance agent, and they will recommend options such as a whole-life policy.

At what age should you stop term life insurance?

If you’re healthy and have a good income, you may be able to cancel your term life insurance policy when you reach age 65 or 70. If you have health problems or a lower income, you may need to keep your policy until age 85 or 90.

Term life insurance policies are very practical and flexible and have their purpose at almost any age that life insurance allows. They allow you to insure against a broad range of risks covering just a few years or decades up to a certain age. Some people choose to keep their term life insurance policy until they die. This way, their loved ones will have financial protection in the event of their death. Even financially independent people buy term life insurance for practical purposes, such as paying estate taxes on the inheritance to the heirs.

Major life events, such as retirement or paying off a mortgage, can also affect your decision to keep or cancel your policy, as your coverage needs may change with these milestones.

Here are some life circumstances to consider when deciding whether to keep or cancel your term life insurance policy.

Your need for life insurance changes over time:

The primary reason to have life insurance is to replace your income in the event of your death. But as you get older and your children become adults, your need for this type of financial protection decreases.

You may also have other sources of income, such as a pension or retirement savings, that can help support your family in the event of your death. Some experts recommend reviewing your life insurance coverage every few years to ensure it still meets your needs. If you no longer need the same level of coverage, you may be able to reduce your policy or cancel it altogether.

Your financial goals change over time:

As you age and enter different life stages, your financial goals will likely change. When you’re young and just starting, you may be focused on building an emergency fund and paying off debt. But as you get closer to retirement, you may be more concerned with preserving your wealth and passing on inheritance to your children.

These changing priorities can impact whether or not you need life insurance coverage. For example, if retirement savings are a priority, you may be better off using the money that would have gone towards premiums to invest in a retirement account. If passing on an inheritance is important, buying a permanent life insurance policy may be better than a term policy.

Your health changes over time:

Your health is another factor to consider when deciding whether to keep or cancel your term life insurance policy. If you develop a serious health condition after buying a policy, your insurer may classify you as “high risk” and either deny coverage or charge much higher premiums. On the other hand, if you stay healthy, you may qualify for lower rates when you renew your policy.

Can I terminate my policy before it expires?

Yes, whether you have a term life plan or a permanent policy, you can terminate your term life plan before maturity. However, review your policy documents carefully to learn about your policy obligations if you terminate early.

Be aware of your options when term policies expire. There are many ways to keep and increase existing coverage, such as converting your term policy or buying a new one. Prudent financial planning usually involves some form of life insurance. Ideally, you want lifelong coverage with a death benefit that can support financial obligations for those who depend on your support. You should assess your financial situation regularly to determine if extending or replacing your Term Life Insurance is necessary.

Term life insurance is a great way to get the highest death benefit at the lowest cost. It also offers the benefit that you may not need a medical exam in case your health status could hinder you from being covered.

Does term life automatically renew in Canada?

Most term life insurance policies in Canada do not automatically renew unless you elect to do so or have a guaranteed renewability clause in your contract. Renewal options provide continued coverage, allowing you to maintain your policy beyond the initial term even if your health changes. These renewals are convenient because they don’t require another medical exam or proof of good health, most renewals do not require new medical exams, but premiums will increase substantially since they’re based on your attained age at renewal.

Renewing can make sense if your health has declined and you would not qualify for new coverage at affordable rates. However, if your health has improved, or if you want longer-lasting protection, it’s worth comparing renewal costs against new policy rates before committing.

In most cases, insurers allow renewals until a certain age, usually 70 or 75. Always review your policy documents and renewal notice to confirm your eligibility window.

Term life insurance ends – Conclusion

When your term life insurance policy ends, the most important thing you can do is plan ahead. Review your coverage well before expiry, understand your renewal and conversion options, and align your next policy choice with your current stage of life.

If you still need protection, compare renewing, converting, or starting a new plan to find the balance between cost and longevity that fits your needs.

To explore your next step, get a personalized quote with Oneday. We make it easy to renew, convert, or start a new plan that keeps your loved ones financially secure. Policies are underwritten by Humania Assurance and are subject to underwriting and provincial regulation.

Frequently asked questions about term life renewal Canada

Sources:

1. Assuris, “How Am I Protected?“