Planning ahead of time can be beneficial in several ways, including having a financial safety net in situations that can dry up your savings with the snap of one’s fingers. Individuals can ensure this financial protection by investing in a term plan insurance that will allow them to safeguard themselves and their loved ones in unforeseen events. However, you might lose coverage if you do not renew your term plan insurance on time.
Renewing your term plan insurance on time is critical to guarantee continued coverage. It helps you get affordable premium rates and benefits. Nevertheless, not renewing your term plan insurance on time might leave your loved ones vulnerable.
So keep reading to learn more about the benefits of renewing your insurance on time and the risks of not renewing your term plan insurance on time.
What are The Risks of Not Renewing Your Term Plan Insurance on Time?
Not renewing your term plan on time entails the following risks:
- Loss of Coverage: Policyholders who fail to renew their term plan insurance on time might lose the coverage amount. In simpler terms, the insurer will not pay beneficiaries the death benefit after the policyholder’s passing.
- Financial Instability: With the loss of coverage of a term plan insurance, you or your family could be left in a difficult financial position. Your family might have to take out a loan, sell gold or borrow money if you fail to renew your term plan insurance on time.
- Higher Premiums: If you slip up the renewal period, you may have to pay a higher premium when you renew it later. On not renewing your term plan insurance on time, insurance companies charge you higher coverage to avoid more risks.
- Loss of Riders: You might incur significant losses on your insurance if you fail to renew your insurance on time. If you have any add-ons, such as critical illness or accidental death benefits, you will lose those riders by letting your insurance lapse.
- Reduced Returns: You might lose the premiums invested if you had purchased a term plan with return of premium or TROP. A term plan with a return of premium promises a return upon maturing the term insurance. However, by failing to renew their term plan insurance, individuals can lose their chance of getting the premium return.
Benefits of Renewing Your Term Plan Insurance on Time
Following are some of the benefits of renewing your term plan insurance on time:
- Continued coverage: By renewing your term plan on time, policyholders can continue to enjoy life insurance coverage for the term. Hence, individuals can continue to live peacefully, knowing their family’s financial future is secured even when they are no longer around.
- No need for a medical exam: With the health risks increasing rapidly in today’s world, it is advised that you renew your insurance on time to avoid going through the hassle of getting a medical examination done for renewal of the policy. This is helpful for individuals who might be suffering from minor health issues since the purchase of the term plan insurance.
- Lower premiums: One of the significant reasons for renewing the policy on time is to avoid paying higher premiums, which is among the main consequences of failing to renew your policy on time. Higher premiums are charged for many reasons, such as lapse of previous policy, older age, or development of health issues.
- Flexibility: Certain term plan insurance policies allow policyholders to transform into permanent life insurance policies. This option entails additional benefits such as fund accumulation and prolonged life cover.
- Avoiding a coverage gap: You must renew your term plan insurance on time to avoid ending up in a pickle. Due to the coverage gap in renewing the policy, your family can be left with no penny in case of your untimely death during that period. Hence, all the hard work will be recovered if you are consistent and alert.
Overall, renewing your term plan insurance on time is crucial for securing the financial future of your close ones in the event of your passing, please do so to avoid loss of coverage, financial instability, higher premium rates, loss of riders, and reduced returns. Thus, it is essential to prioritise renewing your term plan insurance on time to ensure a stable and secure financial future for your family.
So, what are you waiting for? Get your insurance renewed now!
Also Read: Indian Insurance Industry Overview in 2022