Ten years before your term ends: a countdown plan

Ten years before a term policy ends, nothing feels urgent, and that is exactly why the decision tends to get made badly. The decisions with deadlines, such as the conversion window and the last chance to buy new coverage at an affordable price, often come years before the policy itself expires. This post lays out a countdown, from year ten to the day the level period ends, with what to check at each stop.

The family in the examples is invented. Say Alicia, 36, bought a 20-year, $500,000 level term insurance policy ten years ago and is now 46. Her husband Ben, 47, has no individual policy. They have two children, 14 and 11, and a mortgage. Alicia's premium has not changed since she bought. Her numbers are illustrations, and your policy may be built differently, so read your own contract against each checkpoint.

What the countdown is trying to solve

A level term policy is a deal with an end date. For the length of the term, the premium stays the same and the death benefit is guaranteed as long as you pay. After that, the contract does one of several things, and the details are in your policy. Many policies let you keep the coverage at a yearly premium that rises with age. Some reduce the death benefit. Some simply stop.

The Society of Actuaries studied what happens when the level period ends, in a 2021 report covering 25 U.S. companies. It found that in the most common design, the first premium after the level period can be as high as 10, 20 or even 30 times the level premium, and that between 27 and 96 percent of policyholders let the coverage go at that point, depending on the company and design. The people who stayed were, on average, in worse health, which is part of why the prices are so high. The renewing term life insurance after the level period ends guide covers that study in detail.

So the countdown has three jobs:

1. Find out whether you will still need coverage when the term ends, and how much.
2. Keep every option open for as long as you can, because several of them close early or get more expensive as your health and age change.
3. Avoid the two common failures: finding out about the price jump after it hits your bank account, and letting a useful policy lapse by default when a small step would have kept it.

Year 10 before expiry: read the contract and set the dates

This is the cheapest checkpoint and the one most people skip. Find the policy. If you cannot, ask the insurer for a copy, or start with the steps in how to find a lost life insurance policy. Then find four things and write them in one place:

• The end of the level period. Count it from the policy date, which may differ from the date you signed.
• The conversion deadline. The conversion privilege lets you exchange term coverage for a permanent policy without new health questions. Policies often end the privilege before the term itself ends, or at a stated age, whichever comes first. Alicia's policy, for example, might say conversion is allowed through year 15 or age 65, whichever is earlier.
• The renewal schedule. Look for the table of guaranteed maximum premiums for years after the level period. It is usually in the policy pages. If you cannot find one, ask the insurer for the guaranteed renewal premiums in writing.
• What happens at the end. Does coverage stop, renew at rising premiums, or continue at a smaller amount?

Put each date on a calendar with a reminder at least a year ahead. Also check the beneficiary and owner on the form. The how to change your life insurance beneficiary guide covers the steps if something has changed since you bought.

Year 8 to 9 before expiry: a first honest reassessment

At this point, ask only one question: if the policy ended today, who would be hurt and by how much? Rerun the numbers with the How much life insurance do I need?.

Here is Alicia's family at three points in time. The columns show the inputs for a household need, using a simple list of debts, income years, education and final expenses, then subtract what the family already has. All figures are invented.

Check the arithmetic. Now: $215,000 + $90,000 + $12,000 + $240,000 = $557,000, less $140,000 = $417,000. Five years left: $140,000 + $30,000 + $12,000 + $120,000 = $302,000, less $260,000 = $42,000. One year left: $75,000 + $0 + $12,000 + $60,000 = $147,000, less $400,000 is a surplus of $253,000.

The lesson is not that Alicia will certainly not need insurance. It is that the need often falls steadily, and a family can see roughly when it will reach zero. For Alicia the $500,000 policy is larger than the net need even today, and that means there is room to consider a smaller replacement or to let it run out. For a family whose need is not falling, because of a child with lifelong needs or a surviving spouse who depends on a pension that stops at death, the reading is very different.

If you find that you may still need coverage after the policy ends, this is also the time to think about your health. Underwriting a new policy looks at your health and age on the day you apply. A policy bought at 46 costs less than one bought at 56, and a diagnosis between now and then can raise the price or close the door. This checkpoint is not a sales pitch for new coverage; it is the point at which you decide whether the cost of looking is worth it.

Year 5 to 7 before expiry: price a replacement while you are healthy

If the reassessment says you will still need some coverage, this is a good time to get quotes. Apply for a smaller policy that covers the specific gap, and choose a length that matches it. The How long a term do I need? and the laddering term life policies to match your needs guide help you match a length to a need that declines over time, for example a ten-year policy sized for the last years of the mortgage.

Three cautions apply to any new policy.

• Do not cancel the old one. Keep paying the existing policy until the new one is issued, you have read the contract and the the free-look period: returning a policy for a refund has passed. A replacement that goes wrong should leave you with the old coverage intact.
• Expect the clocks to restart. A new policy has its own two-year contestability period in most states and its own suicide exclusion, commonly two years. The old policy's clocks were finished. Answer every application question exactly, because a misstatement in a new application matters in a way the old one no longer does.
• Compare like with like. A lower first-year premium can hide a weaker conversion right, a shorter guarantee or a different rate class. See what to compare between term policies besides price for the checklist.

Here is the kind of comparison the countdown makes possible. Say Alicia wants to know what holding on to her old policy for five extra years would cost compared with a new ten-year policy. She gets the guaranteed renewal premiums in writing and a quote for a new policy. Both are invented.

A new ten-year policy for a lower amount quoted at an illustrative $1,500 a year costs $7,500 over the same five years ($1,500 x 5). In this invented case, the new policy costs about half. The comparison turns on health, so a person in poor health might find that no new policy is available, and the renewal premium is the only option.

Year 4 to 5 before expiry: the conversion deadline may arrive

For many policies this is the checkpoint that matters most, because the conversion window can close several years before the term ends. The converting term life to permanent: how the conversion option works guide explains the mechanics. Here are the questions to put to the insurer, in writing:

1. What is the last date I can convert, and is it a date, an age, or the earlier of the two?
2. Which permanent products are available to convert into?
3. What rate class would the converted policy carry? Many conversions use the original class, but some policies set a different rule.
4. Can I convert part of the face amount? A partial conversion lets you keep a smaller permanent policy for final expenses or a surviving spouse's needs.
5. How much would the premium be at my age now, and how does it compare with the same product bought new?

Conversion is not a bargain in dollars. The permanent policy costs much more than term for the same death benefit, because it covers a lifetime. What it buys is certainty: coverage you can keep regardless of health. It is most valuable for people whose health has declined, and least valuable for people who are still healthy and can buy new term cheaply. If you have no reason to expect you will need lifetime coverage, you may decide to let the window close. Make that a decision, not a miss.

Year 3 before expiry: the last good moment to buy

By three years out, a lot of the choices have thinned. The conversion window may be closed. A new policy still has to pass underwriting, and the price at 56 is higher than it was at 46. This is the last stop where buying new coverage is routine for most healthy applicants.

Ask yourself what you would do if you were turned down. If the answer is "I would be fine," then you do not need to buy. If the answer is "my spouse would be in trouble," then your next step is to apply this year, not next. Use the same method as before: apply, wait for approval and the delivered policy, read it, and only then change the old policy.

Also use this stop to check that your premium is paid in a way that survives a change in your life. A lapsed policy cannot be converted or renewed, and the grace period is short. The life insurance grace periods and lapses guide explains what protects you and what does not.

Year 1 before expiry: get the numbers in writing

Twelve months before the end, ask for four documents.

• The guaranteed renewal premiums for the next five years, from the insurer.
• A statement of the death benefit after the level period, in case it reduces.
• The date the level period ends, confirmed in writing.
• Any notice they plan to send. Some insurers send reminders; others do not.

If your premium comes out by automatic bank draft, look at your statements. The SOA study found that policyholders paying by automatic draft were less likely to drop coverage than those who received a bill. That is probably a sign of inertia rather than a considered choice. A larger draft that begins on the policy anniversary should be something you decided to pay.

Read twelve months before your term life policy ends: a checklist for a shorter list that begins at this stop. If you want to understand why the price moves as it does, why term life premiums jump after the level period ends explains the pricing.

The last 90 days: the final decision

Four paths remain. The table shows what each costs, what each leaves behind and when it cannot be undone.

Do four things before the date.

1. Confirm the beneficiary form on any policy you keep, and on the new policy if you bought one.
2. Stop or redirect automatic payments to match your decision, so that you do not pay for a policy you meant to end, or let a policy you meant to keep lapse.
3. Tell the family what happened and where the papers are. If the policy ended, they should know. If it is still in force, they should know who to call.
4. Keep the paperwork: the final statement, the renewal schedule and any conversion offer. If someone dies after a lapse, the insurer will check dates.

Expiry day and what comes after

If the level period ends and you did nothing, read what the insurer sends. A policy that renews will show a new premium, and the notice may arrive before the date or after it. A policy that stops will not pay a benefit for a death after it ends, and there is generally no cash value to collect, unless you bought a return-of-premium policy. See return of premium term life insurance: is it worth it if yours had that feature.

If you kept the policy at the rising rate, put a reminder in your calendar for each anniversary and ask whether it is still worth paying. A renewal is a one-year decision, repeated.

Who to ask for help

A fee-only financial planner can check the needs analysis. A licensed agent or broker can quote replacement coverage from several companies, and an independent one is not tied to one insurer's products. For disputes about a notice you never received or a deadline you did not know about, your state insurance department takes consumer complaints; see state insurance departments: what they do for you. None of them can promise that you will qualify for a particular policy. The countdown's value is that you will know where you stand years before the date.

Key takeaways

• The deadlines that matter, especially conversion, often come years before a term policy ends, so the clock to watch is the conversion date, not the expiry date.
• Reassess your need at year 8 or 9 and again at year 5; for many families it falls steadily, and a smaller replacement or no replacement may be right.
• If you will need coverage after the term, price it while you are healthy, and keep the old policy in force until the new one is delivered and past its free-look period.
• Get the guaranteed renewal schedule in writing a year ahead, and compare the five-year total of renewing against a new quote, using your own figures.
• Decide before the last 90 days, then align your automatic payments and beneficiary forms with the decision.