As life is full of uncertainties so from a very young age we inculcate a lot of methods to keep ourselves and our loved ones protected. One of such initiative taken by individuals is to have a life insurance policy to safeguard the future of the family. A life insurance policy ensures a financial backup to the beneficiary of the policy as death benefit in exchange for the payment of premium.
While buying a life insurance plan, the buyer should keep in mind to pay premiums regularly. In case of failure of premium payment the policy will lapse. However, most of the life insurance plan offers the options of renewal as a part of the plan. This inclusion is must to have in the policy as it provides the policy holder as option to renew the plan. As buying life insurance policy is important similarly renewal of life insurance policy is equally important.
Obviously one should not suffer the loss on failing the renewal of the insurance policy. Further in this article you will get to know in detail why renewal of term insurance policy.
Renew for a Similar Term?
Suppose you have a Term insurance plan that offers the option of renewal, for tenure of five years. Once the tenure of the policy comes to end, on maturity of the policy the insured person can renew the plan for an additional five years.
Why Renewal of Term Insurance Policy is Important?
Let’s assume that an insured person who owns a term insurance plan suffers a heart attack just prior the policy expires. In such case, if your policy is not renewed then the insurance holder may face many difficulties to buy a new insurance policy.
The renewal of your term insurance plan provides an opportunity to extend the coverage as the insurance company cannot decline the renewal of your term insurance policy if the option of policy renewal was present in the original policy.
Insured does not Need to Provide Medical Test for Policy Renewal
If a policy holder has opted for the option of renewal then he/she do not need to give any type of extra information or go through any medical test. It does not matter whether you have a good health history or bad, if you have an inbuilt option of renewal of the policy then the insurance company will have to honor that no matter what. The only criteria needed for the renewability of the policy is that the insurance holder should fall between the permissible age bracket.
In case, you have a good premium payment history and your insurance cover has not lapsed, you can renew your policy for the renewal term.
There are certain disadvantages that can be faced if the insured person fails to renew the policy.
- It defeats the Purpose of Insurance- one of the major drawbacks of the failure of policy renewability is that the coverage of the policy will be lapsed. In case, any eventuality occur during this time then the insurance will not stand and the beneficiary of the policy will not receive any stipulated lump-sum benefit. In order to safeguard the financial future of your loved ones it is important to put equal efforts to renew the policy as you do while paying the premium amount and choosing the desired sum assured.
- It May Cost you more Expensive- While purchasing a life insurance policy a regular amount as premium is paid to the insurance company. Prior zeroing in on the premium amount of the policy holder many factors is taken into consideration like age, medical history, family check, etc. In case, if the policy terminates due to non-renewal of policy then the insured will lose the premium benefits. If you renew the policy later then you will need to pay the interests as well which will obviously cost you more expensive.
- You lose Out on tax Benefit- As insurance is one of the most efficient way to safeguard the financial future of your family in you absence, it also act as a great investment and saving instrument to achieve your financial goals. Moreover, a life insurance plan also offers tax benefit which comes handy yearly while filing your income tax return.
So it is quite obvious that if you fail to renew your policy on time, the policy will lapse and so no tax benefit will be applicable on the policy.
In Today’s time having a life insurance plan has become a necessity for every individuals and so the renewal of policy. However, not all term insurance plan offers the option of renewal one should check this option while purchasing the policy.
In case of term insurance policy renewal, the insured will be offered the same sum assured value and full life coverage as the original policy.
Renewal of a Life Insurance policy is generally allowed until the policy holder reaches a specific age. There are specific insurance policies are do not consider the renewal if the policy holder age is more than 80 years old. Numerous insurers have specified varying maximum ages for their Term Life Insurance plans.
In case if the insured renews his/her term insurance plan prior turning into 80 years old then the coverage of the policy will extends beyond your 80th year, then your policy coverage will end in the year after your 80th birthday.
Having a life insurance plan by your side especially to provide financial protection to your loved ones is a must do thing. Taking in consideration for your life and health, life insurance plan offers you guaranteed protection. So, it is very important to keep continuing your policy coverage without any interruption. As renewing the insurance policy is not a lengthy process, one can renew the policy online in a quick, simple and hassle free-way. Moreover, the online process of policy renewal also helps you to save extra cent. Do not fail on renewing your insurance policy as it is said that precaution is better than cure.
You may also Like to Read: Top Term Insurance Mistakes
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