People are even more keen to get life insurance after the epidemic and tremendous loss of life, but if the payment is not paid, the term insurance policy expires and no claim can be made.
The Indian life insurance sector has grown rapidly in recent years. People are increasingly choosing for different forms of life insurance, including term insurance. And today, in the aftermath of the epidemic and tremendous loss of life, individuals are even more keen to get life insurance. Life insurance ensures that your loved ones will be financially secure after your death. In exchange, you pay a premium to the insurance company to cover this risk. If the premium is not paid, the term insurance policy will expire and no claims will be accepted. So, what should you do in this situation? Should you renew the policy or get new term insurance?
When Does Term Life Insurance Expire?
As previously mentioned, a term insurance policy is a contract between the insured and the insurer. As a policyholder, you pay monthly premiums, and the insurer in turn keeps your life insured. If you die while the insurance is still in effect, your nominees get the death benefit.
However, if you fail to pay a premium for any reason, your insurance will expire. The insurance premium must be paid on time. The insurer normally allows you a grace period of roughly 30 days after the due date to settle the dues, but if you do not renew your term insurance policy, your coverage will expire. A expired insurance cannot be used to make a claim.
How Do I Renew a Term Insurance Policy That Has Lapsed?
If you want to restore the coverage after it has expired, you have two options:
During the Grace Period
As previously noted, the insurance provider provides a grace period ranging from 15 days to a month. If you have neglected to pay your premium on time, you may simply do it during the grace period and still obtain your term insurance without incurring any additional costs.
After the Grace Period
If you do not renew the insurance during the grace period, the coverage will expire. You may still reactivate it, but the insurance company will need you to pay the accumulated payment plus interest. Many insurance companies also impose a late fee. Aside from that, you will have to pass a health exam, and if your health conditions have changed significantly, your premium cost will increase. When selecting to renew a term insurance policy, you must evaluate the costs and charges that apply. If they seem to be particularly high, you might think about obtaining a new cover.
Which is better: renewing term insurance or purchasing new coverage?
Most term insurance policies have a two-year duration after which they may be renewed or restored. However, there would be thorough underwriting done at the time of revival or reinstatement. In addition, the early death provisions apply for two years from the date of policy revival or reinstatement.
However, in order to revitalize your present term plan, you must examine the following:
Your Actual Age
The premium rate will be modest if you purchased the current coverage while you were young. If you purchase the identical cover now, it will cost much more. Furthermore, since term insurance premiums are fixed at the age of purchase and do not rise subsequently, it may make a lot of sense to maintain your already purchased Term Insurance Plan at a considerably lower cost.
Because you must pay the necessary premium for the expired term plus the cost of revival when reviving the policy, it may seem little taxing on your wallet. So, if the lapse tenure is short, it may be worthwhile to renew it. However, if the cost is very expensive, it may be prudent to get fresh term insurance.
Reevaluate Your Need for Term Insurance:
Insurance companies nowadays present several appealing incentives to their consumers. In fact, some of the newer plans provide advantages that prior plans did not. In this instance, it may make more sense to get a new term insurance policy rather than renewing your current one.
When renewing a lapsed term insurance policy, some term plans provide substantial discounts. Many insurers forgo the interest and penalty payments, making it simpler to reinstate the plan. Take a look at the options accessible to you. Also, remember to examine the advantages and downsides of the new term insurance policies before making a decision.
Term insurance is inexpensive, and if you find a newer and better coverage at a fair price, consider purchasing a new policy rather than renewing an old one. Finally, you must examine the advantages and downsides as well as the cost aspect before deciding whether to reinstate a lapsed policy or get new coverage.