His 20-Year Term Policy Will Expire the Month He Turns 68. The Renewal Notice Will Quote $2,400 a Month for the Same $500,000

He bought a 20-year, $500,000 term life policy in his late 40s to protect a mortgage and kids still in school. Now he’s 67, and the level premium ends the month he turns 68. The renewal notice quotes about $2,400 a month to keep the same coverage, which works out to $28,800 a year. That price goes up again on every birthday after.

Retirees face this regularly. A level term policy is built to end, and most people who bought one in their 40s were covering a specific risk that has since gone away. One caller to The Clark Howard Podcast described the same moment: he had bought term coverage when his children were young, and decades later, with his kids grown, he was paying $46 a month for $100,000 and wondering whether he still needed it.

A $28,800 Premium Rewrites the Math

After the level period ends, most policies renew year-to-year. Those renewal premiums reflect your age at renewal and the insurer’s current rate schedule, and the increases can be manageable at first, then jump sharply later. Insurance companies price this way because healthy policyholders drop coverage, leaving behind those most likely to file a claim.

Even at a flat premium, he would need to pay for about 17 years to equal the $500,000 benefit. Ten years at today’s quote costs $288,000. At a 4% withdrawal rate, that premium would tie up about $720,000 of retirement savings.

Who Needs $500,000 If He Dies Next Year?

Start by asking whether a real financial need remains. Health, conversion rights and estate size only matter after he answers it.

For most married retirees with meaningful savings, the need is much smaller than at 48. After a spouse dies, Social Security pays the survivor the larger of the two benefits, so the household loses the smaller check. To find the real gap, add up the income that goes away at his death (the smaller Social Security benefit, plus any pension without a survivor option) and compare it with what the portfolio can replace. If savings already cover that gap, the policy has done its job. For one caller whose term coverage no longer protected anyone’s income, Clark Howard’s advice was to “just let it expire when it’s done.”

Letting It Lapse Keeps $28,800 a Year Invested

For most people in this position, letting the policy lapse is the right call. The $28,800 a year stays invested for the surviving spouse. He gives up a tax-free lump sum for heirs, but at this price the coverage costs far more than it’s worth.

Cheaper Ways to Keep Coverage Than the Renewal Quote

Some people still have a real gap: a mortgage balance, a pension that ends when he dies, or a spouse with little savings of her own. Even then, the renewal quote is the most expensive way to fill it. Work through these steps in order:

1. Check conversion rights immediately. Some term policies let you convert to permanent coverage within certain rules and time frames with no new medical exam. Ask whether conversion is available, when the window closes, and whether it covers the full death benefit. The deadline can come before the policy expires.
2. Shop a new level term policy if he’s healthy. Howard told a 68-year-old caller that insurance companies “aren’t going to be doing cartwheels” about older applicants. He pointed to a 10-year level term policy running to age 78, with a fixed premium from the age it’s issued.
3. Buy only the coverage the gap requires. Insure the actual shortfall, such as the remaining mortgage or a few years of lost pension income, instead of renewing the old $500,000 by default.

Renewing makes sense in one narrow case: his health has declined enough that no insurance companies will write a new policy, and the need he’s covering lasts only a year or two.

Decide This Before the Level Premium Ends

Start with the contract. Find the conversion deadline and renewal terms, then apply for replacement coverage while the old policy is still active to avoid a gap. The most common mistake: canceling the old policy before a new one is approved, or letting the renewal bill auto-draft without a decision.

Bring in a professional only if his estate is large enough to face federal estate tax. The federal estate tax exemption is $15,000,000 for calendar year 2026. If his estate approaches that level, life insurance may be needed to give heirs cash for estate taxes, and setting up permanent coverage inside an irrevocable life insurance trust justifies paying a fee-only planner and an estate attorney. For nearly everyone else, this is a household budget decision, and the numbers usually point to letting the policy expire.

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