Is It Possible To Extend My Term Policy When It Ends?
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A life insurance plan that provides coverage for a specified period is known as a term insurance policy. If the policyholder dies during the period when the policy was active, the nominee(s) will receive the death benefit. Term insurance is not as expensive as a permanent life insurance plan. Term insurance does not have a cash value. The policies provide only a guaranteed death benefit.
Can You Extend The Tenure Of Your Term Insurance Policy?
Yes, you can extend the tenure of your term plan. Most of the term insurance plans do not expire until the policyholder is 90-95 years old. At the end of the term of the policy, the initial term period ends. It means that the low premium the policyholder was paying for the policy ends. After the end of the pre-decided term (20 years or as the case may be), the policyholder can keep paying the annual premiums until the age of 90 or 95.
However, the amount to be paid at the end of each term will keep increasing. Thus, technically speaking, it is not possible to adjust the term. It remains fixed. However, in some cases, there is a possibility to change the term insurance period. The cases are-
Convert to a life insurance policy
It is one of the best ways to extend your term insurance policy. It is possible only if the policyholder had bought a convertible plan. There will be a clause for the same in the policy document. Additionally, such conversions can take place only after a specified time.
Auto-renewal of the plan
It is another scenario where the term insurance can be extended. The policyholder should have bought a term insurance renewal plan. In such a case, the policy will extend by another term until you attain a specific age.
The best part about a renewable policy is that you can renew it even if you are diagnosed with a medical disease. However, the premium which the policyholder will have to pay after the detection of the disease will be higher.
Term policy expiration at the end of the term
Different plans have different conditions. Most term insurance plans do not expire at the end of the specified period. Generally, they provide coverage till the policyholder is 95 years old. But the premium in such a case will be higher. The premium might increase yearly or after the end of a term, as mentioned in the contract.
One of the primary advantages of a term insurance policy is the high-value coverage provided to a policyholder at an affordable premium. In comparison to other life insurance policies, a term insurance plan has lower premiums. Another significant benefit is that the earlier you buy the policy, the less will your premium be.
Conclusion
It is better to buy a term plan with the longest term policy if that fits your budget. If you have to meet some short-term financial goals, you may customize the length of the policy accordingly. You have to remember that life insurance is extremely situational.
Also read: Life Investment Plans For Salaried People
