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Does life insurance expire?

Last Updated: 02/10/2011 04:35 PM

Depending on what type of life insurance policy you are talking about, it may have an expiration date. Term life insurance policies, including mortgage insurance, are generally based on a specific length of time. This type of insurance is well suited to pay off the mortgage, provide money for college tuition, or simply give your spouse the cash to move back to his or her family homestead. Typically, a term life insurance policy last between 5 and 30 years, but other policies are available. The advantage of an insurance policy that may not have a pay out is that it also has lower premiums. You may never receive the pay out, but if it is needed, the costs will have been lower in the long run.

On the other hand, whole life insurance is sometimes referred to as permanent life insurance because it will not expire as long as the premiums are kept up to date. Whole life insurance is a little more expensive than a term life policy, but it has a guaranteed payout that you can't expect form term insurance. Additionally, whole life insurance allows the policyholder to manage their premium investments and even borrow against the accrued value of the life insurance policy. Even though you pay higher premiums, you still have access to a percentage of the money you have invested in the policy if you happen to fall on hard times

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