As life is full of uncertainties, it is very important to protect the future of the family financially. Death is inevitable and therefore term insurance policy is a must for every individual. At the same time, it is equally important to pay the premium of the policy regularly in order to avail the benefits of the policy.
The renewal of term insurance policy helps the policyholder to continue with the benefits of the policy. If the policyholder opts for the option of policy renewal then they do not require providing any type of extra information or giving any medical test.
By renewing the policy, the insurance holder can increase the coverage of the policy, as the insurance provider cannot decline the renewal of the term insurance plan. The only criterion which is required for the renewal of policy is that the insurance holder should fall within the permissible age bracket.
In case, the policyholder fails to pay the premium of the policy within the premium payment date, then they can avail the facility of the grace period. A grace period of 30 days is provided by the insurance company during which the policyholder can clear the entire due premium and continue with the benefits of the plan.
• The Purpose of Insurance is Defeated
One of the major disadvantages of failure of policy renewal is that the coverage of the policy lapses. Thus, no life coverage will be provided to the beneficiary of the policy in case of an eventuality, during this time period. So, in order to continue to avail the benefit of the policy, it is very important to renew the policy on time.
• It May Cost more Expensive
While buying a term insurance policy, one needs to pay a regular premium amount to the insurer. The premium amount of the policy is determined based on various factors like age, gender, income, health history, occupation, etc. In case, the policy lapses due to non-renewal then the policyholder will lose the premium benefits and he/she will have to pay the interest amount as well while renewing the lapsed policy. Thus, it will obviously cost more expensive.
• Tax Benefit is not provided
Along with the benefit of life protection, one of the major benefits offered by term insurance plan is that it helps to save on taxes. The premium paid towards a term insurance plan is eligible for tax exemption under Section 80C of the Income Tax Act, 1961. Thus, it is quite obvious that if the insured fails to renew the term insurance plan on time, no tax benefit is offered on the policy.
Wrapping it up!
In order to provide financial security to your loved ones, it is very important to have a life insurance plan. By renewing the policy on time, one can continue with the benefits of the plan and ensure financial stability for their loved ones.
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