Term insurance expired - Things to do when your Term policy is ready to expire. If you bought a term insurance plan a decade or more back and it’s about to expire- you might have a lot of questions about how to proceed. After all, everyone’s life has changed a little bit in the last 20 or 30 years. What type of protection your family needs at that time? Can you extend your existing policy?Read more
Let’s discuss the 3 options to consider when your term policy is ready to expire:
Term Life Plan provides coverage for a particular tenure. In case of an unforeseen event at the time of policy tenure, the nominee/beneficiary is provided with the SA (sum assured). This plan is purchased by paying a fixed amount of money at pre-specified intervals i.e., called premiums. Premium amounts are required to be paid on time to avail of all the benefits offered under any of the insurance plans.
Usually, the right time to purchase a term insurance policy is around your 20s, when the number of dependants and the liabilities on you are increasing. In such a situation, your term plan ensures your family members are financially protected in case of your absence.
To avail of most benefits of the term plan, it is very important to keep in mind certain things such as the expiry date of your plan. Once your plan has expired, you stop getting life cover from it. Also, in case of an unforeseen event in such situations, your dear ones will not be able to receive the financial security they would have if your term plan was active. In order to avoid such cases, various options are available that you can opt for when your term plan reaches the end of its term.
Based on the kind of term coverage you had, it’s obvious that you might face any of the following conditions:
The term plan expires without a value of maturity, the life coverage benefits end.
You might receive a sum/ amount equivalent to the full premium paid for the term plan cover
The 2nd option you can opt for is if you purchase a term insurance policy with a return of premium (RoP) option. For Instance, if you purchase a term cover for 20 years of 1 Crore having an RoP option and the premium amount is Rs. 20,000 per year, then you will get Rs. 4 lacs at the expiration of the policy.
Unlike permanent life insurance plans, term life insurance is considered temporary coverage. Also, depending on the length of the term plan you bought, your coverage term could be from 10 to 30 years. But what happens in case if your term insurance plan is coming close to the last year and you still want the coverage in force or active, there are a few options that might be available for you.
If you have a poor health condition, you are getting older, and do not want to undergo any type of medical tests or examination, you have the option to convert your existing term insurance policy to permanent insurance.
Your insurer will offer you various conversion policies to select from. Converting to a Permanent insurance plan simply means that you are required to pay much more than what you were paying for term life insurance. It depends on your insurance company; it is generally about 2 to 3 times the price of your current premium amount.
One of the major benefits of this conversion is that you can control the price by buying a smaller plan. This is a better fit since you are older and do not need as many years of coverage as you wanted earlier. Time is very important in such cases. You should convert within the tenure the term plan allows you to. Some insurers keep the option of conversion open for only 10 years if you had bought a 20-year plan. It is also very important to understand to not convert policies too early. Stay updated always about the details of the policy.
Most of the term plans have a long term which means that you can keep your plan active by continuing the premium payments. This is a smart option if you want to keep your policy active for a short tenure of 2 to 3 years. However, with age, the prices of your plan premium will also increase, if you extend the duration of the plan.
This is one of the feasible options as you can renew insurance online in a hassle-free and quick way possible. You can also choose to renew your term plan offline, here are some of the benefits of renewing plan online:
While renewing an insurance plan online. You have the suitability to do it at your own pace and time. No agents are involved here which means you save a lot of time. Additionally, you have the flexibility to make renewal payments through:
Electronic Clearing Services (ECS)
National Electronic Fund Transfer (NEFT)
Chances of fraud are less
Generally, the insurance is renewed online through the insurer’s website. This simply means that you have all the access to the right information which ensures minimal chances of fraud.
Renewing your insurance online helps you save a lot of money because online plans are less expensive and you are not required to pay for an agent’s services.
If you are still in a good health, buying a new term insurance plan could be more cost-effective than a term conversion. Initiate the application process for a new term plan as soon as possible to avoid the coverage gap. Even though if you have purchased life insurance coverage earlier, changes in your health records could mean that you are not eligible to purchase a new policy. The early you begin, the more prepared you will be to face difficulties in the application process. While buying a new term plan, look out for a smaller death benefit with a shorter tenure and then compare premium rates to find the right premium for your requirements.
It is important to keep a check on the maturity of your term insurance policy so that you are well-prepared in advance to either convert, renew or extend your policy on time, depending on what you are looking for.
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