The fact that you got yourself a term plan is a sign of a good financial decision. You have chosen a great way to secure the future of your dependents and even your retirement. But in order to keep enjoying the multiple benefits of term plans, you need to be as diligent about renewing the policy on time. With that being said, here are some of the details you should keep in mind.
What does renewal of a term insurance policy mean?
One of your prime responsibilities as a policyholder is to pay the insurance premiums on time every month. When you fail to do so, your policy lapses. Now, all is not lost when that happens because any insurer will give you another chance to renew the policy. You should definitely take that chance, or else you risk losing all the benefits of the policy. This is just one instance of policy renewal.
Significance of renewing a term insurance policy
A prime reason to renew the term insurance policy is to avoid facing the hassles of getting a new policy. Getting a new policy means that you will have to start from scratch – right from filling up that application form. It also means that you will have to include your recent medical situation in the policy, which might make you pay a higher amount as an insurance premium.
On the other hand, if there is a renewal clause in the policy, then you will not have to face any of the hurdles. Your insurer is obliged to offer you a renewal, irrespective of any recent medical changes. All they will check is whether you are within the age bracket necessary to take the policy. That’s all! You can get your policy renewed and still pay the same amount as your monthly insurance premium.
Possible disadvantages to face when failing to renew the policy
Now that you know all the reasons why you need to renew your policy, let’s tell you about the disadvantages of not doing the same. Firstly, if you face any untoward incident after the policy lapses, then you will not receive any lump-sum amount to cover the costs.
Moreover, term insurance plans come with major tax benefits, which is one of the reasons to choose these policies. You will not get any tax benefits if the policy lapses. At the same time, getting a new policy might mean paying higher premiums.
The endnote
So, go ahead and pay the premium on time to prevent the policy from lapsing. Also, check the date of maturity and contact your insurer for renewal before that day. There are many term policies like HDFC Term Plan that can secure your family’s financial future.
