What happens when a client outlives the term of a term insurance policy?

When a client outlives the term of a term insurance policy, the policy expires. Term insurance is designed to provide coverage for a specified period, known as the "term." If the insured individual survives beyond this period, the coverage ceases, and there is no payout or benefit.

This characteristic of term insurance emphasizes its temporary nature, as it does not build cash value like some permanent insurance policies. When the term concludes without a claim, the policyholder essentially does not receive a financial return for the premiums they have paid. Therefore, the most accurate outcome when a client outlives the policy is that it simply expires, and the insured would need to seek a new policy or a different type of insurance if they want continued coverage.

On the other hand, the automatic renewal of the policy is not a standard feature of all term policies; many require active steps for renewal or may come with increased premiums upon renewal. A reduction in premium is not typically a feature associated with term insurance, as premiums are usually established based on age, health, and the length of coverage. Lastly, a payout is not applicable in this scenario since the term has ended without an event triggering a claim, such as the death of the insured.