Why is term insurance policy renewal important?
Life insurance plays a crucial role in providing benefits to policyholders when they want to ensure a great future for their families. However, it is imperative to evaluate the difference between various policies properly before buying. This, in turn, helps you choose the right plan accordingly to lead a trouble-free life. Furthermore, as purchasing the right policy is essential, renewing the policy on time is equally necessary. Because failing to do so can lead to various problems when you want to get the benefits. Unfortunately, many individuals fail to renew their insurance policy due to a lack of knowledge and other factors.
Let us take the example of a person named Govind, who bought a term insurance policy with a critical illness cover. He got admitted to a hospital due to a heart attack, and doctors recommended surgery for the problem. However, when he filed a claim with the insurance company, it was found the policy has expired. As a result, he had to spend money for medical expenses from his pocket due to the non-renewal of a policy.
Top 7 Reasons Why Is It Important To Renew Your Term Insurance Policy
- Provides continual security for a family
- Allows a policyholder to avoid extra costs
- Paid-up benefit
- Rider benefits to getting extra protection
- Helps to repay debts and liabilities
- Enables policyholders to manage rising inflation costs
- Tax Benefits
1. Provides continual security for a family
The primary purpose of buying an insurance policy is to provide security for a family when a policyholder is not alive. However, failing to renew the same will result in financial troubles and also defeats the purpose. Moreover, a person can face difficulties in getting treatments for chronic illnesses because they are expensive. Apart from that, policyholders who have debts and liabilities cannot repay them, which results in an additional burden.
2. Allows a policyholder to avoid extra costs
Insurance companies determine the premium rates for a policy based on various factors such as age, gender, medical tests, income, occupation, etc. Therefore, anyone who failed to renew their policy should undergo the same process again. Unfortunately, this will result in high premium prices, which increase the expenses. Furthermore, they lose all their paid premiums that might bring more trouble.
3. Paid-up benefit
A life insurance cover offers only a death benefit to a policyholder when they pass away before maturity. Renewing a policy allows a person to ensure that their family is strongly protected from income losses in their absence. In addition, since the premium rates are minimal, they won’t burden a family in anyways.
4. Rider benefits to getting extra protection
Many insurance companies offer rider benefits to policyholders such as accidental death, critical illness coverage, and permanent disability coverage. At the same time, failing to renew a policy will make a policyholder miss out on those benefits. In addition, since insurance providers update their plans every year, a policyholder should be aware of them in detail that will help a lot to get extra protection.
5. Helps to repay debts and liabilities
Debts and liabilities may lead to several problems that require proper solutions. Some companies offer plans exclusively for individuals and business persons to get rid of them with ease. When a policyholder doesn’t renew a policy, it results in an additional burden to a family.
6. Enables policyholders to manage rising inflation costs
The costs of medical treatments and daily expenses are increasing every year due to the rising inflation. Therefore, having a term insurance policy helps to get more benefits and gives ways to earn regular income after the death of a policyholder. Moreover, renewable term life insurance allows a person to get the same benefits that will help ensure peace of mind from unwanted problems.
7. Tax Benefits
The main advantage of term life insurance is that it allows policyholders to avail of tax benefits while filing a tax return. Failure to renew a policy indicates that they are no longer enjoy such benefits.
Things to keep in mind while renewing a life insurance policy
Those who want to renew their life insurance policy should keep certain things in mind that will help accomplish goals to a large extent.
1. Change of employment
Change of employment can influence the renewal process because it leads to an increase in income levels. As a result, policyholders should review their life insurance as the sudden demise can leave a family in financial trouble.
2. Marriage
A policyholder’s responsibilities and expenses will increase after marriage, and choosing renewable term insurance helps get coverage for a spouse. In addition, the joint term insurance acts as a single policy for a couple which gives ways to ensure more benefits. It even paves ways to receive the sum assured amount when one of the partners passes away.
3. Grace period
An insurance company offers a grace period when a policy lapses or ends. It allows a person to apply for the renewal within a period enabling him/her to pay overdue premiums with applicable interests or penalties. However, it may vary from one insurer to another insurer in a location.
4. Terms and conditions
Every insurer has specific terms and conditions for a yearly renewable term, and a policyholder should consider reviewing them with more attention. It is imperative to read them carefully, which helps to make the right decision while choosing a policy.
5. Policy revival offers
Most insurers offer high rebates on renewable term life insurance policies, and policyholders should check them from different sources. This will help a lot to get good deals that give ways to save more money.
How to renew a term plan?
Policyholders who want to renew their term plan should compare the rates online that pave ways to invest money accordingly. They should also consult with professional advisors or agents to know more about the process in detail. Free quotes are available for customers to renew a policy at the best prices.
Overall, renewing a policy will result in more advantages than buying a new policy. Therefore, policyholders should renew their existing policy without any delay. This will help protect a family from financial setbacks caused by the sudden demise and other factors.
