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  • Why is it essential to renew your term insurance plan timely?

    Published on March 11, 2020

    There is no denying that your life can be uncertain. According to a report, over 86% of Indians feel that their life is uncertain. Due to the rising unpredictability, you might fear the financial well-being of your family members. Since you might want to secure the future of your loved ones in your absence, you should buy term insurance that can allow you to renew your policy after the maturity period. Renewal of term insurance can allow you to safeguard the life of your loved ones after your demise. Let’s understand the importance of term insurance renewal in detail:

    As a policyholder, you might have a term policy for 5 years. After the term policy reaches maturity, you might have to renew the term policy to continue to receive term insurance benefits. The renewal of term insurance can play an essential role. Therefore, let’s understand the importance of renewal with the help of an example. Let’s assume that you are the primary insured person of your term policy. If you suffer from heart attack before the expiry of the term policy and your policy is not renewed, you might not receive financial support under such a critical scenario.  Moreover, you might face difficulty if you look for a new term policy during such a situation.

    If your term policy comes with a renewal option, it can be done with ease. Whether you have a good or bad medical history, your insurer would allow you to renew your term policy without undergoing medical tests. However, you may have to fit in the permissible age bracket to revive your term policy. Therefore, confirm with your insurance company to verify your renewal age.

    1. Zero financial coverage

    The major advantage of a term policy can be the provision of life coverage. However, you might be able to obtain financial coverage only during the on-going tenure of the term policy. If your term policy lapses, your insurer might cease the cover from you. If you do not renew your term policy, your nominees would remain unprotected during an unfortunate event such as death, loss of income, critical illness, etc. Therefore, see to it that you renew your term insurance plan to ensure that your family members can continue to receive the death payout in your absence. The term policy renewal can allow your loved ones to overcome any kind of financial contingency with ease.

    1. High premium cost

    The premium can be a quintessential part of your term policy. Since a premium is paid in return for the life cover, you should pay it regularly during the selected frequency. When you fail to pay the premium amount due to loss of income, physical disability, critical illness, and so on, your term policy can lapse. If your policy lapses due to the non-payment of the term insurance premium, you might lose the flexibility to pay the premium based on your convenience. Moreover, the premium cost after renewal might increase.

    1. Disabled tax benefits

    Term insurance plans can be one of the effective ways to reduce your tax liability. Since it falls under Section 80C of the Income Tax Act, 1961, you can be eligible to claim a deduction up to Rs. 1, 50,000 on your taxable income. However, if you fail to renew within the stipulated time, you might not be able to reap the tax benefits applicable under a term policy. Moreover, you might not be able to use the term insurance tax benefits yearly when you file your income tax returns.

    As highlighted above, having a term insurance plan as a part of your financial portfolio can allow you in securing your family members even after you are not around. Since the primary purpose is to offer protection, you should renew it immediately after the term policy reaches the expiry period. Renewing a term policy might not be a complex process since you can opt for an online revival plan. An online term plan can be convenient, affordable, as well as a flexible form of insurance.