Twenty or thirty years ago, you did the right thing. You bought a term life insurance policy to protect your young family, and you’ve responsibly paid your premiums ever since.
You did exactly what you were supposed to do.
But here’s the problem you might be facing now: that policy is likely about to expire, leaving you with no coverage right when your family may need it most.
If you bought a 20- or 30-year term policy in your 30s or 40s, it’s critical to understand that the product you bought was a temporary tool for a temporary need. In retirement, your needs are different.
Key Takeaways
- Term Policies Expire: Most term life policies bought 20-30 years ago are now expiring, leaving you with no coverage.
- Renewal is Unaffordable: Renewing an old term policy at age 65+ can cause your premiums to increase by 10x to 50x.
- Your Need is Now Permanent: Your old policy was for temporary needs (like a mortgage). Your new need is for permanent needs (like final expenses).
- A Final Expense Policy is the Solution: A permanent final expense policy (a type of whole life) locks in your rate for life and never expires.
Your Old Goal vs. Your New Goal
The policy you bought was the perfect tool for its job. Its goal was “Income Replacement.”
It was designed to answer these “what if” questions:
- What if I passed away before the mortgage was paid?
- What if my salary disappeared, and my spouse couldn’t pay the bills?
- What if my kids needed money for their college education?
Those were big, temporary risks. Now, 30 years later, that job is likely done. The mortgage is paid off, the kids are on their own, and your income is replaced by Social Security or a pension.
Today, you have a new goal. It’s not a temporary risk; it’s a permanent certainty: covering your final expenses.
The 2 Big Problems with Term Life Insurance in Retirement
Your old term policy is the wrong tool for this new, permanent goal. Here are the two reasons why.
- It Expires. A 20- or 30-year term policy is designed to end. That’s the “term.” It provides high coverage for a low price only for that set period. The hard truth is that most policies expire while the person is still alive, which is exactly what they are designed to do.
- The Renewal Cost is Extremely High. Some term policies offer a “renewal” option. This is almost always a bad financial decision. The premium you paid at age 40 was based on the health of a 40-year-old. The renewal premium at age 70 will be based on the risk of a 70-year-old, meaning the cost can increase by 10x, 20x, or even 50x. It can jump from $50/month to $500/month or more, making it completely unaffordable for a senior on a fixed income.
The Right Tool for a Permanent Need
Your new goal—covering funeral costs and other final bills—is permanent. A permanent need requires a permanent policy.
This tool is called Final Expense Insurance. It’s a small policy with three key benefits that term insurance lacks:
- It Never Expires. As long as you pay your premiums, it provides coverage for your entire life.
- The Rate is Locked In. The price you pay when you sign up is the price you will pay forever. It can never increase, even as you get older or if your health changes.
- It Builds Cash Value. A small portion of your premium builds a cash value that you can borrow against in an emergency.
At a Glance: Term Life vs. Final Expense
Here is the honest, side-by-side comparison of the two products.
|
Feature
|
Term Life (Your Old Policy)
|
Final Expense (Your New Policy)
|
|---|---|---|
|
Primary Goal
|
Income Replacement (for temporary needs)
|
Final Expenses (for permanent needs)
|
|
How Long It Lasts
|
Expires (e.g., after 20 or 30 years)
|
Permanent (Lasts your entire life)
|
|
Premiums
|
Low at first, but skyrockets at renewal
|
Locked-in for life, never increases
|
|
Cash Value?
|
No
|
Yes, builds a small cash value
|
|
Best For...
|
A 40-year-old paying off a mortgage
|
A 65-year-old protecting their family
|
What About 'Converting' My Term Policy?
This is a very smart question. Some term policies have a “conversion privilege” that lets you convert all or part of it to a whole life policy without a medical exam.
You must check your original policy documents to see if you have this option and if you are still within the conversion window (it often expires at a certain age, like 70, or before the policy itself ends!).
The Honest Truth: While converting can be an option, it is often still more expensive than purchasing a new, modern Final Expense Policy that is priced specifically for a senior’s needs. It is always smart to compare the conversion offer from your old company with a new quote from Sagewise.
Frequently Asked Questions (FAQ)
This is the most common question. The simple answer is: nothing. Term life is like car or home insurance; you paid for the protection, and the good news is you didn’t end up needing it. The premiums do not come back to you. Its job was to protect your family during those 30 years, which it did.
No. That is the key benefit and the reason you get it. A final expense policy is a form of whole life, meaning the rate is locked in for life and the coverage is permanent. It will be there when your family needs it.
Final expense insurance is a type of whole life policy. “Final expense” just refers to a smaller whole life policy (e.g., $10,000 – $25,000) designed specifically to cover funeral costs and be easy to qualify for. This is different from a large $500,000 whole life policy meant for wealth-building.
What You Should Do Next
If you have a term policy, the first thing you should do is find it and look for the expiration date. If that date is approaching, you have a choice to make.
You could let it expire and hope your savings are enough (which can be risky for your family). Or, you can secure a new, permanent, and affordable policy that locks in your rate and guarantees your family will be protected.
You were a responsible planner 30 years ago. Be one again today.
Get a free, no-obligation quote to compare your options.
