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Why it is Important to Renew Term Insurance Policy?

As life is full of uncertainties it is very important to protect the future of the family financially. As having a term insurance policy is a must for every individual, it is equally important to pay the premium of the policy regularly in order to avail of the benefits of the policy.

The renewal of the term insurance policy helps the policyholder to continue with the benefits of the policy, as the insurance provider cannot refuse to renew the plan if the renewal option was offered in the original policy.

The Policyholder Does Not Need to Provide Medical Test for the Renewal of the Policy

If the insurance holder has chosen the option of policy renewal then they are not required to provide any medical test or any type of extra information. Irrespective of whether the insured has a good health history or bad, he/she can renew the policy. The only criteria that are required to renew the policy are that the policyholder should fall within the permissible age bracket.

In case the policyholder fails to pay the premium of the policy within the premium payment date of the policy, then a 30 days grace period is offered by the insurance company during which the policyholder can clear all the due premium.

The Disadvantage of Not Renewing the Policy

  • The Purpose of the Insurance is Defeated

    One of the major cons of failure of policy renewal is that the coverage of the policy lapses. Thus, the insurance company will not provide any coverage in case of an eventuality during this time and the beneficiary will not receive any death benefit. So, in order to continue with the benefits of the policy, it is very important to renew the policy on time.

  • It May Cost Expensive

    While buying a term insurance policy a regular premium amount is paid to the insurance provider. Before determining the premium amount of the insurance holder, there are many factors like family, medical history, age, income, etc. is taken into consideration. If the policy lapses due to non-renewal, then the policyholder will lose all the benefits related to the premium. Moreover, if the insured renews the policy after the completion of the grace period then he/she will be required to pay the interest as well, which will cost more expensive.

  • No Tax Benefit is Offered

    A term insurance plan is one of the most effective ways to provide financial coverage to the family along with the benefits f tax exemption. As we know that the premium paid towards term insurance policy is tax exempted under section 80C of the Income Tax Act. So, obviously, if the insured fails to renew the policy on time, he/she will not be able to save on taxes.

Wrapping it Up!

If the term insurance plan has the option of renewal, then it is very important to do so before the expiry of the permitted time period. Nowadays, with the online process of policy renewal, one can easily renewal the policy online in a simple and hassle-free way and continue to avail of the benefits of the policy.

Written By: PolicyBazaar - Updated: 08 October 2020
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