Investing in a term insurance policy gives you peace-of-mind from your financial responsibilities to enjoy life’s milestones and can help your family find a new normal in difficult times. However, just investing in a term policy isn’t where your responsibilities end. By paying timely premiums and renewing your policy, you make sure that your policy does not lapse and your loved ones enjoy their coverage uninterrupted.
If you are wondering what happens if you do not renew an insurance policy and it lapses, then here are four reasons why you shouldn’t let your policy lapse:
You are no longer insured
Life is uncertain. No one can tell what may happen when. If there is an unforeseen event while your insurance policy is active, then you get coverage. However, in case your insurance renewal has lapsed and an eventuality occurs during this period, you will not receive any coverage for the same. This defeats the whole purpose of buying life insurance, which is why renewing your insurance policy before it lapses is very important.
Fresh round of medical tests
Most insurance providers make it mandatory for the insured to undergo a series of medical tests the first time they buy insurance. However, while renewing your insurance policy, no medical tests are needed. This is true only when you renew your insurance before it lapses. If you do not renew your policy before it lapses, you will have to apply for insurance as a fresh entrant, for which you may have to undergo another series of medical tests.
Needs a big budget
An insurance provider takes into account your age, medical history, and lifestyle before it zeroes down on your premium amount. The younger you are; the lesser premiums you pay towards your policy. Renewing your policy before it lapses ensures that your premiums remain constant to what they were when you first availed of insurance. In order to keep enjoying low premium benefits, timely insurance renewal is necessary.
No tax benefits
Along with providing you coverage, an insurance policy offers you tax benefits on the premiums you pay. Failing to renew your policy will mean that these tax benefits also cease. In order to continue enjoying tax benefits, insurance renewal is a must.
If you allow your insurance policy to lapse, you will not be covered in the event of a calamity.
Today, at the click of a button, you can renew insurance online. A few things to keep in mind regarding insurance renewal are:
- Not applicable to all policies
Not all insurance policies come with a renewal option. Checking this before investing in a policy is important. Since age is a deciding factor in your premium amount, buying a policy without a renewal option means you will have to pay higher premiums the next time you buy the same policy. Keeping this in mind, it is best to invest in a policy with a renewability provision, as this ensures that you will get the same sum assured and wholesome coverage as your original policy, minus the hassles of new medical tests.
- Age of renewal
Some insurance providers offer renewals until the age of 80 years. But, different insurance providers have different age limits for policy renewal. Check this for your chosen policy.
So, if you renew your policy on time, it will save you all the hassle of going through the same cycle again, saving you time and money!