As far as term insurance is concerned, renewal of the policy is as important as buying it. Life is always unpredictable and uncertain, hence failing to renew your term plan is a risk not worth taking. Here’s why renewal of a term insurance policy is very important:-
No Medical Tests Required For Renewal
If you renew your term insurance policy before it lapses, you don’t have to undergo any medical tests. So your policy can be renewed instantly. However, if your policy has lapsed, you have no option but to buy a new term insurance plan. Buying a new term insurance policy always requires a medical checkup. And if any ailments are found, the premium payable may be hiked up considerably.
Insurance Companies May Refuse To Renew a Lapsed Policy
If you let your policy lapse, you are inadvertently taking on more risk. For instance, if a person suffers from a heart attack or gets afflicted with a grave disease, insurance companies will refuse to renew the policy later. Therefore, in order to avoid such circumstances, you must renew your policy without delay.
Defeats the Purpose of Insurance
The whole purpose of buying a term insurance is to protect your family against financial uncertainties. Letting the policy lapse, defeats the purpose of buying the term insurance plan in the first place. If you fail to renew the policy, it will lapse and you will lose out the coverage benefits. In case, some eventuality were to occur during this time, you will not be able to avail any benefits. By paying the small renewal premium cost, you can ensure that your insurance protection does not have any gaps. Hence it is very important to renew your policy in time so that the future of your loved ones is secured.
Renewal Post-Lapse May Cost You More
If your policy has lapsed, you will have to buy a new term insurance policy. When you buy a new policy various factors such as your age, medical history, family check, etc. will be taken into consideration. If these factors do not turn out to be in your favour, you may need to pay a higher premium.
Lose Out On Tax Benefits
A term insurance policy offers considerable tax benefits to the policyholder under the Income Tax Act. So if you don’t renew your policy on time, you will also lose out the tax benefits that come in handy while filing your income tax return each year.