Can I Change My Existing Term Life Insurance?

How Term Life Insurance Works

When you buy a term life insurance policy, you choose the death benefit and term that best fits your financial goals. Terms usually last between 10 and 30 years, and premiums are due either monthly, quarterly or annually. The premiums and death benefit usually won't change throughout the term. If you die within the policy's term, your beneficiary receives the death benefit. But if the term ends before you die, there's no payout to your heirs and the policy expires.

Learn more: Which Is Better: Term or Whole Life Insurance?

Can You Modify Your Existing Term Life Insurance Policy?

Yes, you can change your life insurance term before it expires, and pursuing this option early on can help you get better premium rates.

You have a few options:

• Renew your term policy
• Convert to whole life insurance
• Buy a new policy

Renew Your Term Policy

Best for: Those who need short-term coverage and want to avoid underwriting.

How it works: Your insurance company may allow you to renew or extend your term life policy if it contains a guaranteed renewable clause. You'll typically keep the death benefit without going through a new underwriting process or getting a new medical exam. Some choose this option if it's the only way to continue having life insurance due to a change in health.

However, the company will likely raise your premiums to account for your age. And renewals are typically for a one-year term, so premiums may continue rising each year. If you need coverage for more than a year or two, it could make sense to convert the policy to whole life or shop for a new term policy with another insurer.

Convert to Whole Life Insurance

Best for: Those who want lifelong coverage and can afford higher premiums.

How it works: If your term life insurance policy includes a term conversion rider, then you may be able to convert to a whole life insurance policy. This could be a good option if your health changes or you need to continue providing for dependents.

Whole life insurance typically remains in force your entire life, assuming you make premium payments as scheduled. These policies build a cash value component over time. You can borrow from that cash value or exchange some of the value for a higher death benefit.

Buy a New Policy

Best for: Those in good health who want more flexible or cost-effective options.

How it works: You can also shop around for a new term life policy, either with the same insurance company or with another insurer. You'll go through the application process again and will need a new medical exam.

This option could make sense if you can't convert your term policy to a whole life policy or can't afford a whole life policy, and you need coverage for more than a few years. It can be a good opportunity to find a cheaper premium or make adjustments to address your needs at this stage in life. If you have more savings and less debt, for example, you may need less coverage. And if your children are a bit older, then you may opt for a shorter term.

Tip: If your term policy is still in force and you know you'll want to extend coverage, you could consider buying a second life insurance policy now. This ensures you avoid paying a higher premium.

Learn more: Reasons to Change Your Life Insurance

Pros and Cons of Extending Your Term Life Insurance

Renewing or extending your term life policy with the same company can help ensure you keep coverage. But it comes with some downsides too. Here are some pros and cons to consider:

Learn more: Factors to Consider Before Buying Life Insurance

The Bottom Line

When you take out a term life insurance policy, you typically choose a fixed term of up to 30 years, but there are ways to adjust the term if you want more or less coverage. Depending on the language in your life insurance contract, you may be able to renew the policy, convert it to whole life or get a new policy, either with the same company or a different insurer. These options can allow you to make adjustments that fit your current lifestyle.

Many states allow life insurance companies to use your credit-based insurance score when calculating your premiums. If your state allows this practice, consider improving your credit if necessary before purchasing life insurance. You can check your credit report and FICO^® Score^Θ for free with Experian, then address any issues you find on your report.