Should You Revive Your Old Term Insurance Policy or Buy a New One?
People are even keener to get life insurance following the epidemic and significant loss of life, but if the payment is not paid, the term insurance policy expires and no claims can be made.
Over the past several years, India’s life insurance market has experienced tremendous growth. People are choosing term insurance among other forms of life insurance in increasing numbers. People are much keener to acquire life insurance now, following the epidemic and significant loss of life. A guarantee that your loved ones will have financial security after your passing is provided by life insurance. In exchange for their taking on this risk, you pay the insurance company a premium. The term insurance coverage expires and is no longer valid if the premium is not paid. So what are your options in this circumstance? Purchase new term insurance or revive the old one?
When Does Term Insurance Lapse?
The term insurance policy is, as previously said, a contract between the policyholder and the insurer. You pay the recurring payments as the policyholder, and the insurer maintains your life insurance in exchange. Your nominees will get the death benefit if you pass away at any time while the insurance is in effect.
However, your coverage expires if for whatever reason you forget to pay a payment. The premium must be paid on schedule. The coverage terminates if you don’t renew your term insurance policy, even if the insurer typically allows you a grace period of roughly 30 days to pay the balance after the due date. An expired policy is not eligible for any claims.
How Can a Term Insurance Policy Be Renewed After It Expires?
After the insurance expires, you have two options for reinstating it:
Within the Grace Period
As previously indicated, the insurance company provides a grace period that lasts from 15 days to a month. If the premium wasn’t paid on time, you may easily pay it within the grace period to acquire your term insurance without paying any further fees.
Beyond the Grace Period
If you don’t renew the insurance during the grace period, the coverage will expire. You can still reactivate it, but the insurance company will require that you pay the accumulated payment plus interest. Additionally, many insurers impose a late fee. In addition to this, you will be required to have a health assessment. If your health circumstances have significantly altered, the premium cost will also increase. When considering whether to renew a term insurance policy, you must take the costs and charges into account. You could think about obtaining a new cover if they appear to be really high.
Revive Term Insurance or Buy a New One – Which One Is Better?
The typical term insurance plan has a certain period of time, usually 2 years, during which it can be renewed or restarted. However, full underwriting would be done at the time of revival or reinstatement. The early death provisions are also applicable for a period of two years following the date of policy revival or reinstatement.
However, in order to resurrect your current term plan, you need to take into account:
Your Age
The premium rate will be modest if you purchased the current policy while you were young. The price of the same cover now would be significantly more. Additionally, continuing your already purchased term insurance plan at a significantly reduced cost may make a lot of sense because term insurance premiums are locked at the age at which you acquire them and do not rise later like health insurance plans.
Charges
It could seem a little taxing on your finances because you must pay the required premium for the expired term plus the cost of revival when you revive the policy. Therefore, it could make sense to renew it if the gap term is little. It can make sense to purchase new term insurance if the cost is really high.
Reassess Your Term Insurance Requirement
Insurance companies now give their clients a variety of alluring offers. In fact, several of the more recent programs have advantages that older ones did not. Instead of renewing your current term insurance policy in this situation, it can make more sense to get a new one.
Discounts
When renewing a lapsed term insurance policy, certain term policies provide significant reductions. It is simpler for you to reinstate the plan since many insurers waive the interest and penalty charges. Think about the options you have. Also, don’t forget to evaluate the advantages and disadvantages of the new term insurance plans online before making a choice.
Term insurance is inexpensive, so if you find a newer, better policy at a competitive price, consider purchasing it rather than renewing an old one. The choice of whether to reinstate a lapsed plan or obtain new coverage must ultimately be made after weighing the advantages and downsides and considering the cost.
