Term insurance is a form of life coverage that lasts for a specific time. Your chosen beneficiary gets the assured sum if you pass away during this period. But what if you live past this period? What if you need protection for longer? Can you make your term insurance last longer? Let’s discover the answers.
Why Do You Need to Extend Your Term Insurance Plan?
There are many reasons why you may want to extend your term insurance plan. Some of them are:
- You have increased your liabilities. You may have taken a home, car, or education loan for yourself or your children. These loans may have a longer repayment period than your term insurance plan. If you die before repaying them, your family must shoulder the burden of paying them off. Extending your term insurance plan can help you cover these liabilities and ensure your family does not face financial stress.
- You may have planned to retire at a certain age, but due to various reasons, you may have to postpone it. For example, you may have to support your parents, spouse, or children financially. Or you may want to pursue your passion or hobbies after retirement. In such cases, you may need to work for a longer period and earn an income.
- You may have upgraded your lifestyle over the years and increased your spending on travel, entertainment, health, etc. You may also have higher medical expenses due to ageing or health issues.
How Can You Extend Your Term Insurance Plan?
There are different ways to extend your term insurance plan depending on the type of plan you have and the options available from your insurance provider. Some of them are
- Renewable Term Insurance Plan: This type of term insurance plan allows you to renew your policy at the end of the term without undergoing any medical tests or providing any proof of insurability. However, you may have to pay a higher premium for the renewed policy as it will depend on your current age and health status. You can renew your policy for the same or lower the assured amount per your requirement.
- Convertible Term Insurance Plan: This type of term insurance plan allows you to convert your policy into another kind of life insurance plan, such as an endowment, whole life, or unit-linked plan at the end of the policy term or before it. You can convert your policy without undergoing medical tests or providing proof of insurability. However, you may have to pay a higher premium for the converted policy, depending on the plan type and features you choose.
- Increasing Term Insurance Plan: This type of term insurance plan allows you to increase your sum assured amount at regular intervals during the policy term. You can increase your sum assured amount by a fixed percentage or amount as per the policy terms and conditions. You may have to undergo medical tests or provide proof of insurability to increase your sum assured amount. You may also have to pay a higher premium for the increased sum assured amount.
- Top-up Option: This is an option that allows you to increase your sum assured amount by paying an additional premium at any time during the policy term. You can top-up your sum assured amount by a fixed percentage or amount as per the policy terms and conditions. You may have to undergo medical tests or provide proof of insurability for topping up your sum assured amount.
What Are the Things to Consider Before Extending Your Term Insurance Plan?
Before extending your term insurance plan, you should consider the following factors:
- You should assess your current and future financial needs and goals and decide how much coverage you need and for how long. You should also consider the inflation, interest, and growth rates of your income and expenses and factor them into your calculation. Use the term insurance plan calculator to assess your needs.
- You should evaluate your current and future health status and the possibility of developing any medical condition or disease affecting your insurance or premium rate. You should also consider your family history, lifestyle habits, and occupation and their impact on your health and life expectancy.
- You should compare the premium rates of different term insurance plans and options and choose the one that fits your budget. Consider the impact of extending your term insurance plan on your cash flow, savings, investments, and other financial commitments.
Conclusion
Term insurance is a simple and effective way to protect yourself and your family from any financial crisis in case of death. However, as your life changes, so do your needs and goals. Extending your term insurance plan can help you adapt to these changes and enjoy life insurance’s benefits. However, conduct proper research and analysis before extending your term insurance plan and choose the best option that suits your requirements.
