What shall be the Next Course of Action if You Outlive Your Term Life Insurance Policy?
The reason why Term Life Insurance Policy is relatively affordable when compared to any other life insurance policy is that it comes with an exact term ranging from 5 to 30 years. In other words, Term Insurance policy is an assurance plan which covers you for a limited period of time. And god forbid if you bite the dust during the term of the policy then your family will get the benefit of your term plan but if you outlive your term plan then what?
- Is it a smart move to buy a new insurance policy after your current policy expires?
- What is better? – to buy a new policy or to extend current policy using riders?
- What sort of rider can you add to extend your existing term life insurance policy?
Now let us discuss the above parameters
Is it a smart move to buy a new insurance policy after your current policy expires?
We all have different lifestyles, and we tend to do things that are suitable for us. The life insurance policy also depends on our need and lifestyle; thus, it varies from person to person. And similarly, term life insurance policy also differs for every person; hence, we cannot generalise and say that buying a new term policy after you outlive your previous insurance policy is a good idea or a bad idea.
It could be a brilliant decision for those who are young and healthy because they can get a term plan with affordable premiums. Wherein if you are already in old age and have various medical issues, then buying a term plan could be a bit challenging. Moreover, the premium amount can vanish your savings as well.
There must be a huge difference in your liabilities and obligations at the time of buying your policy like your home loan, car loan, the number of dependents, etc. However, with the time you may have finished most of your debts and your children also might not be dependent on you anymore.
In such a case, buying a new term insurance policy in case you outlive your previous life insurance policy could be a smart move. But if you have already finished your debts and you are no longer a single breadwinner of the family, then there’s no need of buying it instead you can opt for other feasible plans available especially for senior citizens. So, the purchase decision depends on your financial requirements and dependents.
What is better? – to buy a new policy or to extend current policy using riders?
Peculiarly, you cannot outstretch your term insurance policy. Still, there are various riders available, which gives you this option to extend or to convert your policy into a permanent policy. A permanent policy is like an umbrella term that does not expire. However, the premium amount will increase with the conversion of a term insurance policy to a permanent insurance policy, but it also comes with great death benefits.
If we talk about buying a brand-new insurance policy when you outlive your current one, then there are several things that we must keep into consideration while making a buying decision:
- Buying a brand-new term life insurance plan can be of great help if you still have loans and other debts like mortgage etc. And in case of your sudden demise, this policy will help your family to pay the debts on your behalf without getting extra strain on their financials.
- The premium of the term life insurance plan will be on a higher side at your later years because of your age and health, so you need to calculate whether it is worth spending that premium amount or not.
- There are plenty of other options also available for senior citizens. You can opt for anything from that too, or you can even invest your hard-earned money and get good returns.
What sort of rider can you add to extend your existing term life insurance policy?
A rider is an insurance product that amends the terms and conditions of the policy for the betterment of the policyholder with a little additional cost on the base plan. In other words, riders are add-ons to your base term plan, which makes it more attractive, useful, and reliable in some extra cost on your premium amount.
There are plenty of riders available in the market, and you can choose multiple riders to customise your term plan as per your requirement.
But when it comes to stretch your current policy, only one rider is available that helps you convert your policy, i.e., Term Conversion Rider.
- Term Conversion Rider: This rider gives you competency to convert your existing term life insurance policy into a permanent policy, that too without a medical test. A permanent policy does not expire and provides a death benefit to your family. Most of the term insurance policies, this rider comes inborn.
If you are also about to complete the term of your insurance policy, then you can visit BimaKaro.in and check the best available options for you.