On the expiration date, the coverage stops. If you die the day after, there is no death benefit — and unless you specifically bought a return-of-premium policy, none of the money you paid comes back.
But “expires” is doing a lot of work in that sentence. Most level term policies do not vanish on that date; they roll into a far more expensive year-to-year version of themselves. And a separate, earlier deadline may already have taken away the most valuable option in the whole contract.
Three different dates, and people confuse them
A 20-year term policy has more than one clock running in it:
| What ends | When it typically ends | What you lose |
|---|---|---|
| The level premium period | The “20” in a 20-year term | The locked-in rate |
| The conversion privilege | Often earlier — after a set number of policy years, or at a stated age | The right to buy permanent coverage without new health questions |
| The policy itself | A final expiry age written into the contract | All coverage |
Almost everyone knows the first date. Almost nobody knows the second — and the second is the one that cannot be reopened.
What “expires” usually means: the price changes
At the end of the level period, most term contracts do not terminate — they continue as annually renewable term. The death benefit stays, no one asks a medical question, and the premium is recalculated each year at your current age. At 65 or 70, that recalculation is not incremental. It is the kind of number that makes people open the notice twice.
Most policyholders see it and drop the coverage. That is often the right call, but it should be a decision rather than a reflex — the alternatives are available for a limited time, and one of them was already paid for.
Whether your policy renews at all, up to what age, and on what basis is written in your contract — and carriers differ, as do products sold in different years.
The conversion privilege is the piece with a real deadline
Many term policies include a conversion privilege: the contractual right to exchange some or all of the term death benefit for a permanent policy from the same carrier, without answering new health questions. The new premium is set by your age at conversion and the permanent product’s rates — not by your current health.
That last clause is the whole point. If you bought term at 45 and you are 63 now, something has probably changed on your medical record. Conversion is the one path to permanent coverage that does not care.
The catch is the deadline. Conversion windows commonly close before the term does — after a set number of policy years, or at a stated attained age. Whether a policy has the privilege at all, what it converts into, and when it closes vary by carrier, product and state. The only reliable answer is in your own contract.
Three questions worth calling the carrier with:
- What is my conversion deadline, as an actual date?
- Which permanent products am I allowed to convert into?
- Can I convert part of the death benefit rather than all of it?
The third matters more than it sounds. Partial conversion lets you keep some permanent coverage for final expenses and estate liquidity while letting the rest of the term lapse — a much smaller premium than converting the whole policy, and a common answer for people who no longer need the full face amount.
Two Florida rules that buy you time
Florida law gives policyholders here a bit more room than the raw contract does.
A 30-day grace period, minimum. Florida Statutes § 627.453 requires every insurance contract to provide a grace period of not less than 30 days for the payment of any premium after the first. The policy stays in force during that window, and the insurer may charge interest of up to 8 percent per year for the days of grace used (The Florida Senate). A missed payment is not an instant loss of coverage.
A second set of eyes on a lapse notice. Florida Statutes § 627.4555 requires that for a life policy covering a person 64 years of age or older — issued or delivered in Florida on or after October 1, 1997, and in force for at least a year — the insurer mail notice of an impending lapse to the policyowner and to a designated secondary addressee, at least 21 days before the lapse takes effect (The Florida Senate).
The catch: the secondary addressee only exists if you named one. If you are over 64 and have not designated an adult child or a trusted friend to receive lapse notices, call the carrier and do it. It takes one phone call, costs nothing, and it guards against a policy dying over a piece of mail that landed in the wrong pile.
Do you still need the death benefit?
Term policies are bought to cover a temporary obligation: a mortgage, the income that raises children, a business loan. When those end, so does the need — and letting the coverage go is a perfectly good answer.
It is worth checking a few things before assuming that, though:
- A surviving spouse’s income is rarely the household’s income. Check what happens to your pension survivor election and the household’s benefit checks when the first spouse dies, before deciding the coverage is redundant.
- Final expenses. Someone writes those checks, usually in the same month as the funeral.
- Estate liquidity. A Florida house, a business or a boat is not money. Heirs who need cash but hold only illiquid assets sell on someone else’s timetable.
- A dependent adult child, or anyone whose support does not end when you retire.
- A long-term care plan that has not been funded.
That last one is where a lot of expiring term quietly ends up. Certain permanent policies pair a death benefit with a long-term care or chronic illness rider, so one premium addresses two risks. The trade-off should be stated plainly: drawing on the care benefit reduces what is left for beneficiaries, and rider design, availability and underwriting vary by carrier and state. Any figure in an illustration is exactly that.
If care costs are the reason you are reconsidering, start with the number rather than the product. Our long-term care cost estimator asks for the current monthly cost in your area and projects it forward at an inflation rate you choose, and the long-term care planning page shows how the funding options differ — the same gap covered in what Medicare pays for assisted living.
Your four options, side by side
When the level period ends there are only four things you can do. Comparing them in the abstract is where people stall, so here they are against the questions that actually decide it.
| Let it lapse | Renew year to year | Convert to permanent | Apply for a new policy | |
|---|---|---|---|---|
| Health questions? | — | No | No | Yes — full underwriting |
| Premium | $0 | Recalculated annually at your age; rises steeply | Set by age at conversion and the permanent product | Set by your health today |
| How long it lasts | — | To the contract’s final expiry age | For life, if funded | The new term |
| Best when | The job the policy did is finished | You need a bridge of months, not years | Your health has changed and the need is permanent | Your health is good and you need another long term |
| The trap | The need was not actually finished | Treating a bridge as a plan | Converting the whole face amount when you only need part | Assuming you will qualify |
Two observations that fall out of that table rather than from anyone’s opinion.
Renewal is a bridge, not a destination. Annually renewable term is genuinely useful when you need six more months to close on a house, finish a conversion, or get a diagnosis resolved. Held for years it becomes one of the most expensive ways to own a death benefit.
The two no-questions-asked columns are the ones with deadlines. Renewal and conversion both ignore your health, and both are written into a contract that stops offering them at a stated age. Applying fresh has no deadline at all — it just has underwriting. That asymmetry is the entire reason to find the contract early.
What if you have already been declined?
It happens, and it is not the end of the analysis.
Check the conversion window first. A decline on a new application says nothing about your conversion right, because conversion does not ask. If that window is still open, it has just become the most valuable thing you own.
Carriers are not interchangeable. Underwriting differs substantially by condition, by how long ago it was treated, and by product. A decline from one company is not a decline from the category.
Consider a smaller face amount. Simplified-issue and guaranteed-issue final expense policies exist precisely for this, with smaller death benefits, higher cost per dollar of coverage, and usually a graded benefit in the first two or three years. For covering funeral costs and leaving a bit of liquidity, that can be the right answer rather than a consolation.
Reassess the need honestly. If the mortgage is paid and the children are grown, the question may not be how to replace the coverage but whether it still has a job.
How the payout is taxed
The IRS states that life insurance proceeds received by a beneficiary because of the insured’s death are generally not includable in gross income, and do not have to be reported. Two common exceptions: if the beneficiary takes installments rather than a lump sum, the interest the insurer pays on the unpaid balance is taxable; and if the policy was transferred for cash or other valuable consideration, the exclusion is limited (IRS).
This is general education, not tax advice. Estate-level questions belong with your CPA or attorney.
The order of operations
- Find the contract — not the annual statement, the contract.
- Write down three dates: the end of the level premium period, the conversion deadline, and the final expiry age.
- Call the carrier with the three questions above, and designate a secondary addressee while you have them.
- Decide whether you still need coverage, and how much.
- If you do, compare renewing, converting and applying new side by side, with real numbers.
Do the first three before your conversion deadline. Renewing and reapplying stay available later; the conversion window does not come back.
Virginia Barausky works with Florida families on exactly this read-through — what your policy actually says, what the conversion option is worth given your health today, and whether the coverage is still doing a job worth paying for. If you would like that done before the next deadline arrives, schedule a call. There is no cost and nothing to buy on the first conversation.