Life Insurance Renewal
Since life is full of unknown factors, one of the most critical worries is safeguarding your loved ones when you are away. You can never be completely prepared for the future, no matter how much planning you do or how many precautions you take. Life insurance plans, on the other hand, provide you with the assurance that your family will be financially secure in the event of your death/absence, irrespective of the reason. The best aspect is that a term insurance plan in India can be used to provide financial security for your family without breaking your bank.
However, simply purchasing a term plan is insufficient. To keep the plan active, you must pay all of your premiums on time. The term insurance coverage may lapse if premiums are not paid. If your insurance policy expires, it is critical that you renew your term insurance coverage promptly to ensure that your family’s financial security is not jeopardised.
If you have an existing term plan that is about to expire, let’s have a look at the guide to understanding its importance, tips to renew your existing and lapsed policy, and other factors to keep in mind.
Why It Is Important To Renew Life Insurance Policy On Time?
Here’s the list of points that show the importance of renewing your life insurance policy on time.
- Get the most out of your tax deductions: The tax advantage is a significant advantage of purchasing a term insurance policy. The premiums you pay for your term plan are tax-deductible under Section 80C of the Internal Revenue Code of 1961. This section allows you to get a tax exemption of up to 1.5 lakh rupees. However, if you don’t renew your term insurance policy, you won’t be able to claim tax benefits for the year you didn’t pay the due premium.
- There will be no medical tests: You must start over if you do not renew your term plan and later purchase term insurance. This implies you’ll have to go through medical exams, which can be inconvenient. As a result, it is preferable to choose a timely renewal rather than purchasing a new plan.
- Avoid paying higher insurance premiums: The premiums for term insurance are determined by the insurance company taking into account your age, medical condition, lifestyle, gender, weight, and other factors. Your smoking habits have an impact on your term plan premiums, but it doesn’t imply you can’t get one. Because you are young and in good health when you get a term plan, you will pay lesser rates. If you do not renew your term plan, you will forfeit the reduced rates as well as the benefits of already paid premiums.
- Ensure that the family’s financial security is never jeopardised: The primary goal of term insurance is to financially protect your family in the event that you are no longer alive. When you fail to renew your policy, however, the plan loses its value. It’s critical to renew your term insurance policy to protect your loved ones from financial ruin in the event of your untimely death. As a result, you should place equal emphasis on purchasing and renewing your term insurance policy.
- Avail full policy benefits: Term insurance plans are life insurance policies that only cover risks and do not include any savings. As a result, if you do not renew your term insurance policy, you will lose the advantages of all the premiums you have paid. Your family can benefit from term insurance benefits if you keep your policy active and renew it on time.
How To Renew Your Life Insurance Policy?
If you are looking to renew your life insurance policy, then you need to follow the steps mentioned below:
- On the top of this page, you will see “Renew Life Insurance”.
- You will need to select your life insurance provider from the options on your right-hand side.
- Once that’s done, you’ll be redirected to the page wherein you need to enter your “Policy No’” and “Date of Birth”.
- Then, click on the “Proceed Button” in red.
- You will then see all the details of your policy and the option to renew your policy.
- Simply make the payment and renew your policy.
What Is The Procedure, If Your Policy Get Lapsed?
If your life insurance policy, unfortunately, is lapsed or expired, you will then need to follow the steps mentioned below.
- Communicate With Your Life Insurance Company
Contacting the insurance company is the initial step toward renewing. Inform them of your decision to reinstate the life insurance policy and complete the necessary paperwork to proceed. During this phase, you will be given a revival quote or an estimate of how much you will have to pay. All premiums due on the insurance policy will be included in the applicable amount.
- Pay all Your Due Premium Amount
To reinstate a lapsed term life insurance policy, the policyholder must pay all outstanding payments – from the date of the first unpaid premium to the revival date – as well as interest on outstanding premiums and any relevant taxes and levies. In some situations, the insurance provider may even request another medical evaluation if the policy is revived.
- Don’t Overlook Medical Examination
The cost of a life insurance policy is mainly governed by someone’s health status. You may be required to provide a declaration of good health if your insurance policy has lapsed. You will almost certainly not be subjected to any medical examinations if your insurance coverage is renewed within six months. If the problem persists after six months, you may be required to pay for a health check-up.
Things You Should Keep in Mind About Renewal of Your Life Insurance Policy
Here’s the list of the aspects that you must adhere to while renewing your life insurance plan.
- The Necessity of Renewing Life Insurance- The main goal of your life insurance policy is to provide a safety net for you and your family in the event of an unexpected event. Certain life insurance policies are only active for a specific amount of time. It makes sense to renew your insurance at the end of this period, whether or not you receive a payout if you outlive that period. You will be uninsured for the rest of your life if you do not apply for renewal, and your family will be financially insecure. If insurance isn’t renewed, the whole point of it is lost.
- Recognize the Claim Evaluation Procedure – Now that you’ve finished a term and are ready to renew, it’s time to learn about the claim process. You can do so by contacting your insurance provider directly, who will advise you on the appropriate paperwork. It’s also crucial to understand the claim settlement ratio, which you can get from relatives, friends, prior beneficiaries, or even a licensed agent.
- Prioritise Grace Period: You can and should apply for renewal in one of two situations. Either your coverage expires or the period of your policy expires. In any situation, you’ll normally have a certain amount of time from the date of lapse or maturity to file for policy renewal. This is known as the “Grace Period”. In the event of a lapse, you have a certain amount of time to pay your past-due premiums, plus applicable interest and penalties, and renew your policy. This grace period varies from one insurer to the next.
- Revaluate the frequency with which you pay premiums -Life insurance companies allow you to pay your premiums in a variety of ways, and it’s fascinating to learn how you might save money with different techniques. If you got a raise or a promotion at work, or your firm generated money, try making annual payments rather than monthly instalments. This will not only provide you with peace of mind, but it may also result in significant renewal reductions.
- Medical Advice: Your insurer will determine whether you need a fresh medical test report to renew your life insurance. Your medical issues may change as time passes and you become older. As your mortality risk rises, insurers may request a new medical examination. You might not need a new test if your policy has a built-in option for renewal. If you are a non-smoker with no major health conditions, you may be eligible for a much cheaper renewal price.
- Examine your insurance coverage in light of inflation– Before renewing your term plan, you should think about the country’s economic situation. As a result, it’s critical to forecasting the amount of money needed to fulfil a specific goal (Say ten years down the line). As a result, adjusting the goal calculators is the best approach. If you’re not sure how much life insurance you need, write down your annual salary and multiply it by ten. For example, if you earn Rs.5 lakhs per year, your insurance coverage would be Rs.50 lakhs.
To conclude, it is important to be aware of your life insurer’s renewal policies before purchasing a policy and to ensure that you renew your policy when it is due.
Frequently Asked Questions
Here’s the list of the frequently asked questions related to the life insurance policy.
When term life insurance expires, the policy just terminates, and the policyholder is not required to take any action. The insurance company sends a notice to the policyholder that the policy is no longer active, that the policyholder has stopped paying the premiums, and that there is no longer any potential death benefit.
You may consider renewing your life insurance policy till you reach a certain age. There are multiple policies available on the market that do not allow you to renew the policy if you are more than 70 or 80 years old. Many insurance providers have distinctive ages for their life insurance policies.
True. If you stop paying your insurance premiums, your coverage will be cancelled, and you will be unable to claim any tax benefits.
After the period of a renewable term life insurance policy has expired, it can be renewed. It is possible that the tenure will be as short as one year. In most cases, you can renew your coverage without having to take another medical test or requalify. However, as you get older, your premium may go up every year or every few years.