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Why Should You Renew Your Term Insurance Policy?

Why Should You Renew Your Term Insurance Policy?

There are three broad kinds of insurance policies- term insurance, whole life insurance, and endowment policies. A whole life policy is one in which you pay premium till the death of the insured. An endowment policy is one in which you pay a premium for a specific period and receive a payout in case of both death and maturity. A term plan is for a specified number of years with no maturity benefit. There are multiple variations of these two categories available in the market. Which one you go for depends on your family's financial needs and plans.

What exactly is a term plan?

A term insurance policy is a plan that pays the sum assured in the policyholder passes away within the policy term. Term plans provide a much higher coverage at a relatively low premium. However, if you live out the entire policy term, there is no maturity benefit. Since there is a death payout only, it is advisable to go for as long a term as policy. A term plan is designed purely for protection of family. The death benefit they receive will be high enough to take care of their expenses adequately. This makes it the perfect choice if your family is financially dependent on you.

If you haven't been insured yet, you can check out the Canara HSBC Oriental Bank of Commerce's iSelect Star Term Plan. It can be easily bought online, and offers the option of increasing your cover by 25% every 5 years. This way, your sum assured can increase by 100% in the policy term and your family can be secured even with rising costs.

Benefits of term life insurance renewal

Continued security for the family

The main purpose of a term insurance policy is to provide security to your family in the event of your death. However, if your policy matures and you don't renew it, it lapses and your family loses the security you have been paying for all this while. Non-renewal essentially defeats the purpose of term insurance.

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Paid-up benefit

A term insurance policy generally has no savings component. It is a pure life cover. If the policy matures and you do not renew it, you receive no return for all the premiums you have paid. Your paid premiums essentially become a loss. If you go for term insurance policy renewal and keep paying premiums, it extends your cover for premature death. Your family remains assured of their financial well-being in your absence. Moreover, the premiums are also minimal. So it should not be a huge financial burden to pay it regularly.

Avoiding extra costs

When you first buy a term insurance, a lot of factors like your age, medical history, family situation, etc. are taken into consideration. If you simply opt for term insurance policy renewa, you might not have to go through the entire process again. You might have to undergo medical tests again, but this depends on your insurer. However, if your policy lapses, you will have to go through the entire procedure again and could end up paying more by way of interest, higher premium amount, etc. Many a time, people stop paying term insurance premiums because there is no paid-up value. The policy then lapses, and they lose all the premiums they have paid. Then they have to opt for a new policy which ends up costing them more.

Tax benefits

Premiums paid for an insurance policy are tax-deductible under Section 80C of the Income Tax Act. If you stop paying premiums in order to save money, you also lose out on the tax benefit and might end up with a greater taxable income. The death benefit of a term insurance policy is also exempt from tax under Section 10(10D) of the Income Tax Act.

If you have been thinking of a term insurance policy and haven't zeroed in on one yet, make sure you check out the Canara HSBC Oriental Bank of Commerce's iSelect Star Term Plan. It offers optional cover for accidental death and accidental total and permanent disability.

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Frequently Asked Questions (FAQs) for Term Insurance Plans

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term insurance 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 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

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 when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

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, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan 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 plan 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 insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan 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 insurance 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 the Best Term Insurance Plan?

  1. 1. Are you buying a term plan with return of premium?
  2. 2. Amount of premium you have to pay based on your age, habits, education, and monthly income
  3. 3. The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
  4. 4. How to save money on tax if you pay for the term life insurance plan?
  5. 5. Do they offer regular income options?
  6. 6. Can you change the coverage and premium in the future?
  7. 7. Does the claim consider valid if death occurs outside India?
  8. 8. Which kind of death is not covered by a term insurance plan?
  9. 9. Can NRIs take a term insurance plan? If yes, what are the conditions?
  10. 10. Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
  11. 11. Under what circumstances can a term insurance plan be cancelled?
  12. 12. Can I pay the premiums online or make electronic payments?
  13. 13. What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?
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