Life is full of uncertainties and hence, purchasing a life insurance policy is very essential. There are various types of life insurance plans such as term plan, endowment plan, ULIPs, etc.
A term insurance policy is a type of life insurance that provides life coverage only for the specified duration. By purchasing a term plan, you will be able to secure the future of your loved ones even in your absence.
Term insurance policies can be availed at comparatively lower premium than traditional life insurance, and hence it is one of the most preferred insurance products amongst sole breadwinners who wish to safeguard their family’s future.
Since a term plan offers life cover only till a fixed duration, a common dilemma faced by policyholders is whether the policy term can be extended. There are certain circumstances under which the duration of term insurance policy can be increased or decreased.
Now that you know what is term plan, let’s have a look at how you can extend the policy term of your term insurance:
By Opting to Convert Your Term Plan to a Life Plan
- If you have a convertible term insurance plan, you can consider converting your term plan into a life plan. Thus, make sure that you read the policy documents carefully and check for conversion clause before purchasing a term insurance policy.
- You must note that you can convert your term insurance plan into a life plan only after a specific period, as mentioned in the policy document.
In Case of Auto-Renewal of the Term Plan
- If you have purchased an auto-renewable term plan, the insurance provider will automatically extend the policy term at the end of the policy duration. Your term insurance policy will be extended even if you are diagnosed with any medical condition.
- On extension of your term plan, the premium will change. You would be required to pay a higher premium as compared to the premium paid during the initial term.
Mentioned below are some scenarios under which the duration of your term insurance is decreased:
If You Don’t Pay Your Term Insurance Premium
- If you fail to the pay the premium of your term insurance policy, it will automatically get terminated and the policy will lapse.
- However, if you have a premium waiver rider, the term insurance policy will continue to remain in force till the end of its actual term even if you fail to pay the premium due to financial crunch.
- To avoid this, you must purchase a term plan with affordable premium. Nowadays, before purchasing a term insurance, you can easily calculate its premium by using a term insurance calculator. You can also compare various term life insurance offered by different insurance companies online. This will help you avail a term plan that best suits your needs.
A lot of people believe that all term insurance plans in India are the same. However, you must note that the terms and conditions may differ from one plan to another. Most term life insurance offer coverage up to 95 years of age and do not expire at the end of the policy duration.
Wrap Up -Extend The Policy Term Of Your Term Plan
Usually, the term gets extended with an increase in the premium. The premium may increase either annually or at the end of the term, as mentioned in the contract.
Therefore, if you wish to purchase a term insurance policy, you must compare the plans of different insurance companies and settle for the one that suits your requirements in the best possible way.
In case of any query, you must not hesitate and seek the help of a financial advisor. This will help you make a well-informed decision that will be fruitful in the long run.