Term life insurance is a must-have in any portfolio today. It safeguards your family’s financial future in case of your unfortunate demise within the policy period. It is also a tax-efficient instrument that gives you tax benefits under Section 80C (on your premium payments for policies up to Rs. 1.5 lakh). Purchasing a term plan is thus a no-brainer.
You should always keep a few things in mind while investing in term insurance. First, calculate the premium payable with an online term insurance premium calculator and check the insurance company’s claim settlement ratio. You should also carefully choose your coverage amount vis-à-vis the premium amount you are paying and finally select the right policy tenure.
However, while all this is essential when choosing a term life insurance policy, the process does not end there; after you have successfully chosen a suitable plan, you should also make sure to renew the same with alacrity. If you do not renew your policy when it matures, your family will lose the security you have been paying for all along. Non-renewal effectively nullifies the purpose of term insurance. Here is a closer look at the same in this article.
Why You Should Not Put Off Renewing Your Term Insurance Policy
The significance of term life insurance renewal cannot be overstated. If you have a term plan and suffer a severe illness just before the policy expires, you will be unable to purchase new coverage.
Term insurance renewal is non-negotiable and a must for every policyholder. Here are some points that will help you understand why:
- Renewal is what keeps your policy in force or active.
- Renewing is what gives you an opportunity to further extend your coverage. Note that the insurance company can only accept the renewal if it was mentioned in the original policy document.
- Renewals do not require any fresh medical tests or sizable documentation. Hence, the health history, your life information and other factors are not as important at this time, while the process also takes lesser time than buying a new term life insurance.
- The sole requirement while renewing a policy is that you should be in the right age group.
- Those who have consistently paid their premiums in time with policies that have never lapsed will find renewals to be a breeze.
- Failure to renew the policy in time will lead to the policy lapsing. It will naturally mean that your nominee/beneficiary will not get any death benefits if something unfortunate happens to you in this period after the policy lapses. This defeats the purpose of insurance in the first place, i.e. financially safeguarding your nominees from your untimely demise within the policy period. Payment of the premium in time and policy renewal is a must for keeping the policy active, so there are no coverage gaps.
- Renewing the policy will help you save on taxes since you will get deductions of up to Rs. 1.5 lakh under Section 80C. Failure to pay your premiums and renew the policy means that the policy will lapse, and you will not get your tax benefits accordingly.
- Renewal is non-negotiable for ensuring that your family gets continued and consistent financial security.
While renewing your policy, you can also bypass some additional costs. Several factors are involved when you purchase a term insurance policy at first, including the family scenario, medical history, age, and other aspects. If you choose a renewal, you will no longer have to undertake the whole process. Depending on the insurance company in question, you may not always require medical tests. The policy, if it lapses, can lead to a scenario where you will have to go through it all again for revival or buying a new one. At the same time, the money you paid on premiums for some time will be completely wasted if you do not renew the policy and pay your premiums in time.
Hence, renewing your policy in a timely manner is essential. The sooner you do it, the better for you and your nominees. This ensures that the policy benefits and coverage continue to remain in force without any interruptions or disruptions. You should not neglect timely policy payments and renewals for anything else. Once you invest, ensure that you maintain the same care throughout the policy period. After all, you do not want a scenario where your loved ones suffer due to non-renewals or a policy lapse owing to the expiry of the grace period (the duration given by the insurer for paying premiums if you miss the original payment date).
