What can typically happen at the end of a term life insurance policy?

At the end of a term life insurance policy, it is common for the policyholder to have the option to renew the policy, although this renewal often comes with a higher premium. This typically occurs because as the insured individual ages, the risk to the insurer increases, warranting an adjustment in the cost of the coverage.

Renewal terms may be outlined when the policy is initially taken out, so the policyholder knows what to expect as the term nears its conclusion. It is crucial for policyholders to review these terms closely before the expiration of the policy, so they are prepared for any increase in premiums and can make informed decisions about their coverage options.

In contrast, the other options involve outcomes that are not standard for term life insurance. Coverage is rarely automatically extended without the policyholder's consent, nor is a payout provided at the end of the term since term life insurance only pays a benefit if the insured dies within the coverage period. Lastly, while a policy can terminate without renewal, this option lacks the proactive involvement of the policyholder that renewal provides, making it less common than the option to renew at a higher premium.