Many Term Life Insurance policies offer the renewal option as part of the plan. This is an important inclusion to have in the policy, as it gives the insured person the chance to renew their plan on maturity for another term similar to the original policy.
Additional Reading: The Definitive Guide To Buying Term Life Insurance
Renew for a similar term? Explain, please!
Let’s say you have a Term Plan, with the renewal option, for a tenure of five years. At the end of the tenure, on maturity, you can renew the policy for an additional five years.
Why is it a good idea to renew a Term Life Insurance policy?
Let’s say, a person with a Term Life Insurance plan suffers a heart attack just before the expiry of the policy. In this case, in the absence of a renewal option, the policyholder will find it rather difficult to get a new insurance policy.
The ability to renew your Term Insurance plan gives you extended cover because an insurance provider cannot refuse to renew your policy if the option was offered in the original policy.
No need to provide any further medical tests for renewal
If an insured person has opted for the renewal option, he/she will not be required to give any additional medical tests or information.
If you have the option to renew your policy, it will have to be honoured by the insurer no matter how your health is, whether good or bad. This renewability has to be accepted by the insurance provider, provided that the insured person’s age falls into the permissible age bracket.
Given that your premium payment history is good and your insurance cover has not lapsed, you can renew your policy for the renewal term or until you, the insured person, attains the maximum age mentioned in the policy, whichever may be shorter.
Additional Reading: When Is The Right Time To Buy Term Life Insurance?
Term Life Insurance is not always renewable
Not all Term Insurance plans offer the renewal option. You must check this with the insurance provider before getting a policy.
Renewal will be for same Sum Assured value
If you renew your Term Life Insurance plan, you will be offered exactly the same Sum Assured value as the original policy. Your insurance coverage cannot be decreased by the Life Insurance company on renewal.
Additional Reading: How A Term Plan Does A Lot More Than Just Insure Life
Maximum age of the insured person
Renewal of a Term Life Insurance plan is generally permitted until the insured person attains a specific age. Many insurance policies are not considered for renewal if the insured person is over the age of 80 years. Various insurers have stipulated varying maximum ages for their Term Life Insurance plans.
In case you renew your Term Life Insurance policy before you turn 80 years of age, and the coverage of the policy extends beyond your 80th year, then your insurance coverage will lapse in the year after your 80th birthday.
Renew your policy before the expiry of the grace period
If you have the option to renew your Term Life Insurance policy, you should remember to do so before the expiry of the permitted time frame. Insurance companies generally give you 30 days within which you must renew your policy.
Additional Reading: Term Life Insurance: Return of Premium Plans
Now you are wiser about why the renewal of your Term Life Insurance policy is important. Let’s explore options for you.