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Life is unpredictable and is not always a smooth ride. The only way one can attempt to be prepared for a stable financial future is by buying a life insurance policy. In a situation where the primary breadwinner of the family is no more, due to an unfortunate incident, in a sudden manner and the family members are left behind to fend for themselves, a life insurance policy comes into play. The basic function of life insurance is to leave behind a nest of money for the family. However, many other benefits are worth considering for anyone contemplating buying life insurance. Life insurance, like most insurance policies, needs to be renewed once the coverage period is over.
Life insurance policies act as contingency plans for family members of the policyholder. The primary aim to buy life insurance is to have liquid finances in hand, in case of any unforeseen situation like the death of the breadwinner of the household. However, life insurance policy schemes are meant to provide life cover for some time only. The insured will receive the insured amount only if the claim is made within the active period of the life insurance.
Once the life insurance policy’s period is over, one has the choice to renew it. If the option to receive a payout at maturity is not marked, renewing the life insurance is a good idea overall. All the benefits of the policy will lapse if it is not renewed. This will open up to vulnerabilities in case of emergencies. Not to lose on all the advantages of purchasing life insurance and to continue receiving coverage, insurance providers allow the policyholder to renew their existing life insurances within a specific period.
There are many reasons to purchase a life insurance policy, but there are more reasons why it should be done when it comes to life insurance policy renewal. There are certain situations when a proper review, a subsequent renewal of the policy must be done, or cannot be overlooked.
The following points are some reasons why one should not delay or hesitate to renew their life insurance policies:
Besides the primary purpose of purchasing a life insurance policy, they also have various tax benefits. The Income Tax Act's section 80C offers tax deductions of up to Rs 1.5 Lakh. If the insurance policy was to lapse and not renewed, all tax benefits will cease. The insured can no longer claim deductions for the income tax returns at the end of the financial year. This, in turn, will increase the income tax burden of the policyholder.
The premium amount paid on life insurance policies is decided after considering several factors of the applicant. Factors such as age, gender, health conditions, medical history, etc. are decisive. For an applicant at an advanced age, the premium could be higher as compared to a younger applicant who will be considered 'less risky.' If one is lucky to avail of a lower premium for the insurance, failure to renew, the policy scheme will mean loss of the lower premium. All benefits of a lower premium will be lost if the policy is not renewed on time. If life insurance renewal is done after the termination of the active period, extra charges may apply. This, in turn, makes the policy more expensive and negates the lower premium benefit.
Life insurance is bought to provide coverage and financial independence; in case something was to happen to the insured. Not renewing the life insurance policy would mean no longer receiving the benefits of the policy scheme. If the insured expires from an unfortunate turn of events or requires medical attention, a huge financial burden is in the family. Future expenses of the children and the grieving spouse are left in the lurch. The primary purpose of purchasing life insurance is defeated if it is not renewed on time.
Insurance providers recommend renewing or upgrading any existing insurance policies at essential milestones like marriage, childbirth, purchasing property, etc. in life that is generally considered for renewal of policy schemes. Marriage would involve restructuring the existing finances, mostly resulting in more expenses. The policy must be renewed to cover the partner or new child being born. Similarly, if a new house has been purchased, a home loan might have been taken out. The life insurance policy renewal must be done keeping in mind existing funds available to pay off the loan payments. Also, the policy can be modified to keep the family afloat after all loan payments are made.
Promotions and salary increments are a part of daily work life, but their implications on existing life insurance must not be ignored. A higher monthly income means a higher tax paid off at the end of the financial year. One major benefit of purchasing life insurance is the tax exemption it provides to individuals. Getting a tax exemption would lead to a reduction in the tax burden, leaving more funds to be invested in the policy. The financial planning for the policy, including allocating funds for investment, any long-term financial goals must be reviewed during the life insurance policy renewal at times of change in income.
Any job change in a person’s life involves a changed income. With a higher disposable monthly income, there are lifestyle changes that come in play and higher expenses. Life insurance must also be reviewed and renewed if need be among all other unavoidable changes with a change in employment. The increase in income can be utilized in purchasing extra coverage for the policy. This, in turn, will increase the financial coverage for the family members if the insured were to pass away unexpectedly. It is a chance to make sure any new lifestyle changes are not compromised upon even after the primary breadwinner is no more
Life insurance policies renewal has been made easy and convenient for everyone by the insurance companies. There is no need to step into offices to renew insurance policies. The process of renewing existing life insurance policies from the comfort of home has been outlined below.
Every insurance provider has certain conditions in place which must be met by the insured for the life insurance policy renewal to be approved. The following stated conditions are general statements and will differ from company to company.
Life insurance policy renewal is easy and hardly takes much time now. There are some pointers which must be kept in mind for the next time, the renewal date of the policy scheme rolls around.
All insurance providers send in reminders for the renewal date at least 45 days before the due date. In the reminder, details of the policy, such as the sum assured, claims made, and details regarding bonuses and other terms and conditions are mentioned. The policyholder should make sure to take a look at all details mentioned to avoid missing any discrepancies. If any corrections are to be made, it must be mentioned on time to the insurance provider.
Life insurance plan renewal is the perfect time to assess and go over the financial goals and needs. Medical costs are on the rise steadily, and the existing coverage of the policy might not be enough to cover it. Also, there could be a need to add members such as spouse on to the plan. Any such changes must be reviewed and made effective.
Policyholders have the option to increase the sum insured in the policy scheme. The insurance provider will ask for fresh medical tests to be done and will also review the policy's claim history to check if the sum insured is changed. It must be noted that if the existing sum meets the limit of the sum insured of the policy, the request to increase the sum insured will be rejected.
It is natural for new illnesses to crop up over time, since signing the original policy. All new illnesses must be disclosed to the insurance provider with honesty. Failure to do so will lead to the rejection of claim requests made in the future.