Term insurance has been introduced in the insurance industry for the financial security of your family. It is the purest form of insurance that can provide death benefits to your loved ones in your absence. However, your family members can receive coverage for their security only during the on-going tenure of the term policy. If your term policy matures or lapses, you should renew it to keep your family adequately insured and reap the term insurance benefits.
Before you buy a term plan, let’s first under how your term policy can lapse in the future:
The premium can be a crucial component of a term insurance policy. Since term insurance can provide a life cover, you should pay the premium amount regularly until the on-going tenure. As a policyholder, you can decide to make the payment annually, half-yearly, monthly or quarterly based on your convenience.
On the other hand, there can be times when you might be unable to pay the premium due to loss of income, physical disability, critical illness, and so on. When you struggle to pay the premium, your insurer can provide you with a grace period of 30 days. The grace period is given to you to make the payment within those 30 days and save your term insurance from lapsing. If you are still unable to pay the due premium, your insurer can cease the term insurance benefits as well as terminate the policy.
After your term life insurance policy lapses, you can renew the policy to reap the benefits or buy another term insurance plan. Although there is no specific time to revive your lapsed term policy, you might have to fulfil specific conditions mentioned below for the renewal:
- If you renew your term life insurance within six months from the time it has lapsed, the procedure of restoration can be easy.
- If you renew your term life insurance plan after six months, you might have to pay the unpaid premium amount, applicable penalties, and the interest rate.
- If your term policy has been into force for a duration of three years, your insurer can let you renew within two years.
- If your insurance company is not convinced with the integrity of your application, your insurer might levy specific restrictions. Ideally, you might have to undergo medical tests again to check for any development of new ailments.
- If you commit suicide within a year of the renewal, your insurer can reject your claim.
- If anything happens to you within two years of the renewal, your insurance provider can investigate your family members regarding your death and provide the death benefits accordingly.
Claims can be an essential part of your term insurance plans. However, many of you might have several questions in mind, which can be whether you can claim after your term policy has lapsed or not. To find a solution to your query, let’s go through the two essential scenarios mentioned below:
- If you stop paying the premium amount within three years of the purchase, your insurance company might not provide the death benefit to your nominees.
- If you do not make the premium payment after three years from the date of the purchase, your insurer can offer death benefits to your nominees after deducting the unpaid premium amount from the sum assured value.
To sum up, term insurance should be an essential part of your financial planning. The primary purpose of a term policy is family protection. If you don’t renew your term policy, the purpose of the formulation can be defeated. Renewing the term policy can cover you and your loved ones from the eventualities of life.