What Happens to My Life Insurance If I Don’t Die? Do I get my money back if I don’t die by the end of the policy term? Does life insurance pay out if you don’t die? Continue reading below as we answer every question you might have about life insurance.
What Happens to My Life Insurance If I Don’t Die?
All types of insurance have this annoying habit. If you don’t use it, you still pay for it. It’s how insurance companies make their money. And life insurance is no different. Don’t expect a refund if you’re still kicking about when your life insurance expires. You won’t even get a farewell card.
But the saddest part is that you won’t be around to enjoy the win. However, you can rest in happiness knowing that your family and friends are sorted.
So if you outlive the end of your term, it’s easy to look back on those last 25 years of premiums as a big fat waste. You shouldn’t, and we’ve even written a piece on this ‘is Life Insurance a good investment’. Just in case you were interested.
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What are my options after my life insurance expires?
Getting close to your “life insurance expiration date can induce stress. That’s right — that same life insurance policy that gives you peace of mind then dons a black cape and sinister moustache and cackles in your face like a banshee on crack. One day you’re leaning on the comfort of life insurance, and the next it’s got its bags packed and half a foot out the front door. You could get another quote, for another policy but it’s likely to be very expensive, or very complicated and just imagine the medical questionnaire, if they’ll even let you take out another policy with them.
Well it is, if you’ve a traditional life insurance policy anyway. There is another way.
Does life insurance pay out if you don’t die?
Sorry guys, but we all know the old phrase, “nothing in this world can be said to be certain, except death and taxes.” Everybody dies. However, when is a key factor in whether or not you will receive a life insurance payout.
If you pass away within the term of your term life insurance, or at any point if you have whole-of-life cover, you are likely to receive a payout. However, if you are still alive at the end of your term life assurance, you won’t receive a payout.
Term life insurance can be an option for those who feel they only need cover for a certain period. For example, if you feel your insurance is to protect your spouse against the cost of paying the mortgage alone, then you may decide to take out life insurance that lasts as long as your mortgage.
The advantages are that term life insurance is often cheaper than whole-of-life cover, however, there is a risk that you will never receive a payout.
Some life insurance policies include critical illness cover, which usually pays out when you are diagnosed with certain serious illnesses. If you have this type of cover, you could well receive a payout even if you don’t die.
Taking out life insurance isn’t always an easy decision to make and no one likes to think of their own or their loved ones’ mortality. That’s why it’s a good idea to talk to an objective third-party, like an independent financial advisor about your options.
Can you get your life insurance money back?
In the case of most whole-of-life life insurance and term life insurance policies, which are the two most common types of life insurance, you will not have your premiums returned to you. Whole-of-life life insurance covers you until you die and then pays out, regardless of when that is. Term life assurance pays out if you die within a pre-agreed term. However, if you do not die during that term, the policy will not pay out and you will not receive your premiums back.
There are some circumstances where you may be able to opt for a ‘return of premiums rider,’ which could mean that you get some or all of your premiums back in certain situations, but this could also lead to much higher premiums in the first place.
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Life insurance redesigned
Oh, we see you, fickle life insurance. That’s why we started DeadHappy, to do life insurance the way people want it. Every year we let you reset your 10 year term back to the start, subject to a few health and lifestyle questions. And you can do this every year until you’re 60, giving you continuous coverage until the ripe age of 70. What’s more, every year we’ll calculate your premiums based on your life today, so you’ll never pay for coverage you don’t yet need.