What Should You Do When Your Term Insurance Is About to Expire?
To battle uncertainties, it is important to ensure that we do our part in creating a secure future, especially for our loved ones. A future where your loved ones can deal with the financial setbacks of life is possible only when there are adequate funds available. One can buy term insurance to ensure the availability of finances for their loved ones in unfortunate times. Like most other insurance products, term insurance, too, has an expiry date and will end as mentioned in the policy contract. What shall you do then? Should you be without a life cover? We resolve these questions and more in the article below.
What is term insurance?
First, let’s understand how term insurance works. There are mainly two types of life insurance – whole life/permanent life insurance and term life insurance. The first of the two provides a life cover for as long as you are alive. The latter, though, is available for a specific period only. Once the period ends, your term insurance expires. Therefore, it is also advisable to opt for a longer tenure. If you want to understand how much premium you have to pay for a larger tenure, the term insurance premium calculator can be of help. It uses various factors, such as age, gender, lifestyle habits, coverage, tenure chosen, and so on, to give you an estimate of the premium.
If you do not have any other life insurance policy, then expired term insurance means that you are left with no life cover, which can be a risky situation for your loved ones to be in. Thankfully, there are certain ways to deal with this situation.
What you can do when term insurance is about to expire
Switch to a permanent life insurance plan
You can reach out to the insurer and get your term insurance plan converted to a whole life insurance plan. Most insurers allow their policyholders to access this option. Transferring your life cover to a whole life plan would mean increased premiums, especially if you are doing it at a senior age. You can get an idea of the increased premium with a life insurance premium calculator. Just like the term insurance premium calculator, the life calculator tool gives an estimate of the premium based on certain variables.
Note that insurers may only allow you to switch within a particular period. If you do not access that time window, then the chance to convert to a whole life policy may be lost.
Buy a new term life insurance plan
Now that your previously bought term insurance is about to be expired, you can consider buying a new one altogether. This option is especially suited for relatively younger people who are healthy and who had opted for shorter tenures earlier. When you buy term insurance anew, ensure to pick the right insurer who offers the benefits you are looking for. Even though you may be young, the increase in age could mean an increase in the premium as well. Plus, you may also have to go through some medical check-ups required to issue a term insurance policy.
Renew the term insurance plan
Term insurance policies can be renewed as well. It is advisable to renew the policy online via the insurer’s website, as that will be a quicker and hassle-free process. Since you are already a policyholder, several bits of information may be already available with the insurer. All you would have to do is update the information and your policy will be renewed.
Extend the term insurance coverage
For the uninitiated ones wondering, “what is term insurance extension?’, it is basically an option wherein you get to extend your term insurance coverage for an additional period of a few years only.
Usually, term insurance does not have any maturity benefits. However, if you have opted for the ‘return of premium’ feature with your term insurance plan, you will receive a lump-sum pay-out at the end of your term insurance plan. You can also use this money to create additional life coverage with the options given above.
Before you buy term insurance anew or go ahead with any other decision, do consult a financial expert to get a fuller understanding of the matter. Thank you for reading!