Does Life Insurance Expire? How and When Coverage Ends

Life insurance serves as a financial safeguard, offering a death benefit to beneficiaries upon the insured’s passing. The duration of this coverage, however, is not uniform across all policies. Some policies are designed to provide protection for a specific timeframe, while others aim to offer coverage for an individual’s entire life. Understanding these distinctions is important for financial planning and protecting loved ones.

Life Insurance with a Defined Term

Term life insurance provides coverage for a specific, predetermined period, known as the “term.” Common term lengths include 10, 15, 20, or 30 years. The policy remains in force for this duration, and if the insured person dies within the term, the death benefit is paid to the designated beneficiaries.

When the specified term concludes, the policy expires, and coverage ceases if the insured is still living. Policyholders have several options as the term ends. One option is to renew the policy, though premiums increase due to age and health changes. Another option is to convert the term policy into a permanent policy, often without a new medical exam, though usually at a higher premium. Policyholders can also purchase an entirely new policy, which may involve a new application and medical underwriting.

Life Insurance Without a Defined Term

Permanent life insurance policies, such as whole life and universal life, are structured to provide coverage for the insured’s entire life, assuming premiums are paid as required. These policies do not “expire” in the same way term policies do because they are designed to offer lifelong protection. A significant feature of permanent policies is the accumulation of cash value, which grows over time on a tax-deferred basis. A portion of each premium payment contributes to this cash value, which can be accessed by the policyholder through loans or withdrawals during their lifetime.

While permanent policies do not expire, they do have a contractual “maturity” date, typically set at a very advanced age, such as 100 or 121. If the insured lives to this maturity age, the policy’s cash value usually equals the death benefit, and this amount is paid out to the policyholder, concluding the contract. Another way these policies can end prematurely is through a “lapse.” This occurs if premium payments are not made and the policy’s cash value is insufficient to cover the ongoing costs of insurance. Whole life policies feature guaranteed premiums and cash value growth, while universal life policies offer more flexibility in premiums and death benefits, with cash value growth often tied to interest rates or market performance, subject to minimum guarantees.

How Life Insurance Coverage Ends

Life insurance coverage can cease through several distinct mechanisms. “Expiration” refers to term life insurance policies reaching the end of their defined period. When a term policy expires, coverage ends, and no death benefit is paid if the insured is still living. This is a planned conclusion to coverage.

A “lapse” occurs when required premiums are not paid. Insurers provide a grace period, often around 30 or 31 days, after a missed premium due date during which the policy remains in force. If the payment is not received within this grace period, and any available cash value is exhausted or insufficient to cover the premium, the policy terminates. Reinstatement of a lapsed policy may be possible, often within a period of a few years, but requires payment of past due premiums and proof of insurability.

“Maturity” is an event for permanent life insurance policies. These policies have a contractual maturity age, around age 100 but increasingly 120 or 121 in newer policies. If the insured lives to this age, the policy’s cash value becomes equal to the death benefit, and this amount is paid out to the policyholder, concluding the contract. This is a fulfillment of the policy’s terms rather than a termination due to non-payment.

Finally, “surrender” is a voluntary action by the policyholder to terminate a permanent life insurance policy before its maturity or the insured’s death. When a policy is surrendered, the policyholder receives the cash surrender value, which is the accumulated cash value minus any surrender charges or outstanding policy loans. This action immediately ends the death benefit coverage provided by the policy.