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Term life insurance only lasts 10 to 40 years, and if you outlive your term life insurance policy (good news!) — it expires and you no longer have coverage. For most people, this is ideal. By the time their coverage expires, they no longer have as many financial obligations and don’t need life insurance.

If you find you do need continued coverage, you can usually convert your term policy into a whole life insurance policy. However, you must do this before the policy expires, so make sure to begin the process at least six months before your coverage ends. 

Can I get money back from a term life insurance policy?

Usually, no. Once a term life insurance policy expires, you do not receive any money back, even if the policy went unused.

However, you can get your money back if you purchase a specific type of term policy called return of premium insurance. If you outlive your return of premium insurance policy, you’ll be refunded your premiums, although the insurer will retain any administrative fees.

This may sound too good to be true, and that’s because it is. Return of premium life insurance is significantly costlier than traditional term life insurance. Most people will see higher returns by buying a traditional term life insurance policy and investing the difference. 

Can I cash out my term life insurance policy?

No, you cannot withdraw money from term life insurance. Term life only pays a death benefit to your beneficiary if you die during the policy’s term. It doesn’t have the cash value component that some permanent life insurance policies have.

You can sell your life insurance policy to make some money if you need to. This isn’t the most lucrative sale, however, as a lot of the payout will be deducted due to broker’s fees and taxes.

Do I get money back if I cancel my term policy?

No. You do not get money back if you cancel your term life insurance policy. The only instance where you might receive a refund is if you prepaid for some coverage. For example, if you pay your premiums annually but cancel your policy in the middle of the year, you will get a refund for the remaining months. However, administrative fees will likely be subtracted.

What if I still need life insurance coverage?

If you outlive your term life policy and still need coverage, you have two options:

  1. Convert your term policy to a whole policy: Most policies include this option, but you need to convert your policy before it expires. Once your policy has expired, it cannot be converted. 
  2. Buy a new policy: You can purchase an entirely new policy, though rates may be a lot higher because you’ve aged or if your health has changed. 

Make sure to compare the rate you will receive for a new policy versus the rate you will receive for a converted policy to get the best possible deal. 

While you can’t cash out a term life insurance policy, this is usually the best policy to buy. It provides the most robust coverage at the lowest possible price. Instead of getting a more expensive policy you can withdraw cash from, consider getting term and investing the difference for a higher return. 

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Nupur Gambhir
Managing Editor

 
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Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service.