Term Life Insurance Will It Pay When I Die?
Posted August 3, 2009 – 4:23 pm in: term life insuranceMy grandmother took out term life insurance on me for 20 years term when I was 1 month years old. Now, I am 23 they told her 3 years ago my term life insurance is paid up. From company “American General Life & Accident”. But, i heard/read that term life if not renewed after my 20 years it will not be affective meaning nothing is owe to my beneficiary once I die. Is this true?
When my 20 years term life insurance was paid up in 2006, my grandmother did not renew. I guess she did not know if she had to renew or was needing to renew. Since she did not renew is my term life insurance, is my insurance still payable to my beneficiary?
4 Comments
If it was actually a term policy that was not renewed, it will not pay out to your beneficiaries at this point. After 3 years it is unlikely that you will have the option to renew a term policy without proof of insurability and a rate up. If you can get a copy of the policy it will let you know what your options are, if any. Maybe it is actually a whole life policy that paid up.
Might be time to shop around for other coverage. At your age, the options are still very affordable.
BTW..American General is AIG.
Unfortunately, your grandmother wasted her money taking out a policy on a child. Very very few children will die so young meaning it is a total waste of cash. Now you know why insurance companies promote policies on children.
Had a policy been taken out on her, with you as beneficiary, when she passes, you would inherit the term amount.
Thus, the policy she took out is now defunct.
A term policy ends at the end of the term. If it was not renewed and a premium paid there is no insurance. So no, your insurance is not payable to your beneficiary.
Term life insurance only pays out if you die during the term of the policy. It is used solely to protect your heirs, particularly for parents to provide for the care of their minor children in case the parent(s) die before the child is educated and self-supporting. I cannot imagine your grandmother was stupid enough to take out term life insurance on a child.
You may be confused with a 20-year-pay whole life policy. This is a whole life policy which is paid for for 20 years. Then it is “paid-up whole life.” It has cash value in addition to death benefits. This is something parents or grandparents would take out on a child in order to save up for college and to give a child a start at life. Before the advent of 529 college plans, 20-pay whole life was a very popular way for parents to save up college funds for each child.
You need to sort out what kind of policy you actually have here. I think you are confused.