Can I extend my Term Insurance Policy?
November 25, 2019
A term insurance policy is a basic insurance cover that provides financial protection to your family in case of your untimely demise. Typically, the term insurance is taken for a specific duration, but you can adjust the term under particular circumstances. Read on to know how?
Term insurance is a life insurance policy that is taken for a fixed-term, which means you are secured only for that specific period. In case of your untimely or unfortunate death before the end of the policy term, the insurance company will pay your appointed nominee the death benefit as the sum assured, which is pre-determined at the time of taking the policy. However, if you outlive the policy term, usually the policy expires, and you don’t get any returns or payout.
So, if you are a term insurance policyholder, you may have wondered if it possible to extend the policy term? The term cannot be adjusted; it remains fixed. But, there are certain circumstances under which the term insurance period can be changed (either increased or decreased). Some of these conditions include:
If you fail to pay the Term Insurance premium and you do not have a premium waiver rider:
If you default on the term insurance premium payment, the policy will automatically get terminated and the cover will lapse. However, the only exception is if you have a premium waiver rider. In this case, even if you fail to pay the premium due to loss of income or any other reason, the policy will continue to remain in effect till the end of the actual policy term.
If you convert your term insurance plan to a life plan:
One of the best ways to get an extended term insurance policy is to convert your term plan into a life plan. However, this is applicable only if you have a convertible term plan and you have a clause for conversion in the policy document. Also, you can convert your term insurance plan into a life plan only after a specific period, as mentioned in the policy document.
On the auto-renewal of the term plan:
This is another instance where you can extend your term insurance plan. If you have purchased a renewable term plan, at the end of the policy duration, the insurance company will extend the policy by another term until you attain a specific age. The best thing about the renewable term plans is that you can get the extension even if you are diagnosed with any medical condition. However, you must know that in case of the policy extension, the premium amount will change; you may have to pay a higher premium than the original premium paid during the initial term.
All the term policies do not cease at the end of the term:
It is a general notion among people that all the term insurance plans are the same. But, the reality is, every plan has different terms and conditions. Before you sign on the insurance contract, you must carefully read the terms mentioned in the policy document. Most term insurance plans do not expire at the end of the term. Most term insurance plans provide coverage up to 95 years of age.
In most cases, unless specified otherwise in the policy document, after the term life policy expires, the term gets extended with increasing premium. The premium amount increases either yearly or at the end of the term, as mentioned in the contract.
So, if you want to buy a new term insurance policy or if you want to extend the policy, you must compare the plans of different insurance companies and find the best insurer to suit your needs.
Click here to apply for a Term Insurance Policy.
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