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What happens when 20 - year term life insurance expires?

dateKnowledge Centre Team dateAugust 13, 2021 views245 Views
Term Life Insurance Plan | Buy Best Term Plan Online | iSelect Star Term Plan

Everything is planned and going on as per plan. You married at 27, had 2 kids by 30, and purchased a flat at 31. You go on vacation every year and are also planning for your children’s careers even as you climb the corporate ladder to earn more name, fame, and wealth. All is well until everything is well in the jigsaw puzzle of life. What if one piece of this puzzle goes missing? What if that piece is you?

Household appliances have guarantees, but, unfortunately, life has no guarantee. But life insurance is one instrument that can help your family cope up with the bills and strive to attain the goals that you had set. Life insurance, especially term life insurance, is a guarantee that your family will have money in the bank even though the emotional loss is irreplaceable.

What is Term Insurance?

Term life insurance provides insurance coverage for a specific period and ergo, the phrase “term insurance”. In case of unfortunate demise during the term period, the beneficiary is given the “Sum Assured”. Term insurance is availed by paying a fixed amount, at pre-defined intervals, called premiums. Premiums have to be paid, without fail, to avail of the full benefits that are offered under any insurance policy.

Learn how does a term insurance plan work.

What Happens When Your Term Plan Expires?

Depending on the type of term cover you had, you may face any one of the following situations:

1. The plan expires without a maturity value, the life cover benefit ends

2. You may receive an amount equal to the total premium amount you paid for the term cover

The second option is possible when you buy a term plan with a return of premium option. For example, if you buy a 20-year Term cover of Rs. 1 crore, with the return of premium option and your premium is Rs. 20,000 p.a., you will receive Rs. 4 lakhs at the expiry of the plan.

What to Do When Your Life Insurance Expires?

Premiums are calculated basis the person’s health, age, health condition, and Sum Assured. A health check-up may be triggered depending on the level of risk assessment. Premiums are fixed and payable for the entire length of the policy term. In case of unfortunate demise before the policy expiry date, the nominee gets the Sum Assured, also called the Death Benefit.

In case of demise after the policy expiry date, the Sum Assured may or may not be paid depending on the terms and conditions of the specific policy. You can renew or buy a new term insurance policy if the insurer’s rules allow; however, the new premium will depend on the age and health at the time of renewal.

What Is the Ideal Length of a Term Life Insurance Plan?

When exploring term insurance plans, you must go for the one that meets your needs and life circumstances. Some insurance companies may provide coverage until the age of 99 whereas others may offer coverage only until 75.

The length of tenure of a term insurance plan is as important as the Sum Assured amount offered. If your family does not get the money because of the age criterion, the entire purpose of availing of a policy is defeated.

Age Recommendation
In your 20’s If you are single and do not have any financial dependents, you can save money in investment plans instead of putting in term plans. However, if you do, you must look at a minimum term of 40 years and preferably until the age of 99
In your 30’s and 40’s You must look for a minimum term of 30-40 years and preferably until the age of 99
In your 50’s and 60’s Your children would be financially independent by then. Focus on getting a plan that can support your spouse in your absence. A term of 20-30 years is recommended.

Canara HSBC Oriental Bank of Commerce Life Insurance’s iSelect Star Term Plan is a robust and comprehensive policy covering the most probable scenarios as listed below:

1. Term Cover

This is the most fundamental option if you have just set out on your journey to explore life insurance products.

For example, Mr Ramesh, aged about 40 years, is comparing term life insurance plans. His wife Rashmi, 37 years, is also keen to have her policy. Both can opt for separate policies and on one’s demise, the other would get the Sum Assured. In iSelect Star Term Plan, Ramesh and Rashmi can opt for a joint policy which will be cheaper than buying two separate individual policies.

2. Whole Life Term Cover

Both death and terminal illnesses are covered under this option. If Ramesh is diagnosed with a terminal illness at 45, the Sum Assured would be paid to Rashmi and the policy will close. If Ramesh is hale and hearty until the maturity of the policy, all the paid premiums would be returned to him, but the policy would continue until Ramesh attains 99 years of age. At the age of 99, Ramesh would get the Sum Assured, and then the policy would cease.

3. Term Cover with Return of Premium

If Ramesh, aged about 40 years, dies before completion of the policy term, his spouse Rashmi would get the Sum Assured. However, if Ramesh outlives the policy term, all the paid premiums would be returned to Ramesh.

Learn about term insurance plan with return of premium.

iSelect Star term plan, offered by Canara HSBC Oriental Bank of Commerce Life Insurance, comes with a plethora of options to meet the diverse needs of different types of people and at an affordable cost. Some of the salient features:

  • Option to cover for a term or your lifetime
  • Add riders such as Accidental Death Benefit, Accidental Total, Child Support Benefit, and Permanent Disability Benefit
  • You can take up a joint policy along with your spouse at a discounted rate
  • Gradually step-up Sum Assured and Premiums along with age to meet your life’s changing needs
  • Special premiums for women to ensure inclusiveness
  • Tax benefits and loyalty discounts

Thus, you should choose a term plan as per your objective at the maturity of the plan. The difference between the benefits of these plans also affects their cost. However, it’s only a fraction of the benefit amount.

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Frequently Asked Questions (FAQs) for Term Insurance

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while buying Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
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